Comparing organic and conventional dairy farms in the Netherlands : a Monte Carlo analysis

Summary

The demand of organic milk products increases rapidly in the Netherlands during the past years. The organic milk producing ability is far from reaching consumers’ demand. However, the expanding market room and high milk price do not change the fact that organic sector in the Dutch dairy system still contains a small percentage. In order to investigate the low conversion rate in the dairy farms, a family farm income model with Monte Carlo simulation and Multivariable Empirical distribution are used to discuss the viability of organic and conventional dairy farming system. The results present that organic farming seems to be better choice for the dairy farmers because of higher farm income. in spite of the statistic results, more variables like policy change or farming experience also need to be taken into consideration when a dairy farmer is making a farm strategy decision.