By Candace Page
Burlington Free Press Staff Writer (link no longer available)
WEST SWANTON — Earl Fournier’s accountant tells him the profit from his 75 milk cows tripled — from $9,000 to about $30,000 — in 2004-2005, the first year he switched his Holsteins to producing organic milk.
“The numbers don’t make you jump out of your chair, but I can say for certain I’m no worse off and the potential to be really better off is there,” he said Thursday, considering the bottom line at his kitchen table.
“I didn’t think this farm was sustainable into my retirement. Now I think it can be,” said the 51-year-old dairyman, who farms with his sons David, 30, and William, 12.
Nevertheless, Fournier endorses the cautions found in a report released in December by researchers at the universities of Vermont and Maine. They studied the financial performance of 30 organic dairies in the two states in 2004. Two-thirds of those farms failed to make a profit.
“Overall, we find that the average organic dairy operation was not profitable in 2004. The average rate of return on farm assets was minus 2.9 percent,” the researchers reported.
Their findings surprised some. Dozens of conventional Vermont dairy farms have switched to organic production in recent years, attracted by the promise of dramatically higher and more stable prices for their milk.
About 100 of Vermont’s more than 1,200 dairies now farm organically. That means the cows graze on pasture all summer; hayfields and pastures are not treated with herbicides, pesticides or artificial fertilizers; cows are fed only organic grain and are not treated with antibiotics or the commercially produced hormone BST.
American consumers are eager to buy organic milk, despite its higher price. Demand has been increasing at 20 percent or more a year, and the supply hasn’t kept up.
At Shaw’s supermarket in Colchester on Thursday, a half-gallon of Shaw’s fat-free milk cost $1.85. A half-gallon of Organic Cow fat-free cost $3.49 — but you couldn’t buy it. The case was stripped bare of that and every other kind of Organic Cow milk.
When Fournier was considering a switch to organic production in 2003, the price paid to farmers for a conventional gallon of milk had dipped as low as 99 cents a gallon.
Organic milk, he calculated, would pay him at least $1.85 a gallon. In 2006, he will be paid at least $2.24 a gallon.
But high prices aren’t the whole story, he and the researchers hasten to say. High feed costs and lower milk production wiped out much of the premium paid for the milk on the average organic farm in the UVM study.
“You’ve got to know what you’re doing,” said Glenn Rogers, a UVM Extension agent and one of those who worked on the organic farm research. To succeed, organic farmers — like conventional farmers — must be good at managing their animals, their fields and their books.
The study, Rogers urged, is just a one-year snapshot and the picture may look very different in the study’s second year. The real value of the study is to reinforce the importance of careful, realistic financial planning.
Fournier agreed. “This isn’t a business for everybody,” he said. “You have to be able to manage your cows and your land differently.”
A balancing act
Fournier farms the flat fields off Campbell Bay Road on Missisquoi Bay, as his father and grandfather did before him. He is a square-faced man whose grimy baseball cap urges “Consistent Results,” and who mixes a pragmatic interest in the bottom line with a willingness to try new things.
For more than 20 years, he farmed largely by the traditional wisdom of dairy farmers: To make more money, make more milk.
He pushed aggressively for high production in breeding and feeding his cows. He used BST, the hormone that also causes cows to give more milk.
“I followed what was supposedly the approved way of doing things,” he said. In one way, the farm succeeded. Making milk paid the bills and paid down debt. The future, though, looked bleaker.
Fournier and his wife, Susan, would like one or both of their sons to take over the farm someday. But a conventional farm milking 75 cows simply could not generate enough income for the young men to afford a price that would pay for their parents’ retirement.
Fournier studied organic dairying and concluded that it suited his land and style of farming — with the potential over time to generate greater profit. He calculated that with good management of his pasture and hay lands, he could hold the cost of organic feed low enough to balance the drop in milk production when his cows went off BST and ate less grain.
He has turned out to be right.
His feed costs are only about $100 per cow higher than they used to be, he said. Milk production per cow has dropped by nearly one-third, but is nearly a third greater than the average farm in the UVM study.
The price he is paid per gallon also has outstripped his expectations. Organic bottlers have raised prices repeatedly as they struggle to meet consumer demand and compete for a limited supply of milk. Learning to eat grass
In the beginning, his cows had to learn to eat grass.
Like many Vermont dairy farmers, Fournier had kept his cows in the barn most of the time. All their hay and grain was delivered to them.
“They didn’t seem to know what to do that first summer” of organic farming, when he turned them out for months to crop green grass, he said. Milk production dropped more sharply than he expected, though it improved this past summer as the cows became more efficient grazers.
There were other fresh challenges. When a cow got sick, antibiotics were off limits; Fournier had to learn to use natural and herbal medicines that were not always as effective. Twice, he turned to antibiotics to save a cow’s life. The cows then had to be sold, because their milk would no longer meet organic standards.
Nurturing the land became more important, too, because the cows were now getting more of their protein and energy from grass.
“It was a steep, steep learning curve,” Fournier said.
The payoff is not just a higher price for milk, but a predictable one.
The price paid to conventional dairy farmers varies from month to month, according to a complicated federal system. Milk prices can hit an all-time low one year, an all-time high the next.
Fournier’s buyer, Organic Valley, sets a minimum price for the year.
“That means I can budget with confidence. The only wild card is my production per cow — and that’s up to me, to do my job to keep them producing well,” he said.
Before he moved to organic farming, Fournier said, he felt at the mercy of the federal pricing system.
“This organic market is consumer-driven,” he said. “That makes me feel better. And if I get more production, people want the milk and are willing to pay for it.
“So, basically, our fate is in our own hands,” he said, and smiled with satisfaction.
Contact Candace Page at 660-1865 or e-mail [email protected]
