USDA census shows profitability of organic farming

Organic farms were, on average, more profitable than the average of all farms in the U.S., according to results of the first-ever federal census of organic agriculture. A total of 14,540 organic farms had sales of $21.1 billion from more than 4 million acres of farm and rangeland.

State highlights show income, enterprise variations State-by-state parsing of the NASS organic census data reflects the great diversity of US farming operations in general.  These include the interaction of climate, soil and productive capacity (size of farms, crops grown, enterprise variation); relative distance between farms and consumers (marketing mode); and the interplay between high-value crops and market access (farm-size viability).  Some selected highlights: Colorado: About 28 percent of first-point sales were done locally (within 100 miles of the farm), while 47 percent were done nationally. Crops (including nursery and greenhouse products) made up 54 percent of the state’s $70.2 million in organic sales. One-third of the state’s 220 certified organic farms (averaging 770 acres each) have been organic for less than 10 years. Virginia: The 180 Virginia organic farms included 12,308 acres of land, of which 7,144 acres were cropland and 5,164 acres were pasture or rangeland. Its producers reported organic sales of $19.2 million, or about 1 percent of all U.S. organic sales. Virginia’s organic operations had an average of $106,617 in sales, compared with $61,334 for all Virginia farms as reported in the 2007 Census of Agriculture. Production expenditures averaged $100,291 per organic farm, compared with the statewide average of $57,226 for all farms, giving the Dominion State’s organic farmers a slight edge in net income, $6,326 compared to $4,108 for all farmers. Missouri: Audrain County led all Missouri counties in sales volume and acreage, with seven farms and 1,352 acres of organic production generating $319,000 in sales. Clinton County had the most farms (12, with 346 total acres) but the lowest sales volume ($4,000). There were 58 organic  farms in Missouri with 313 acres producing $244,570 in sales. Top crops were tomatoes, ”other vegetables,” potatoes, lettuce, squash and peppers. Minnesota: Minnesota’s 550 organic farms placed it in seventh place for number of farms per state, behind California (2,714), Wisconsin (1,222), Washington (887), New York (827), Oregon (657), and Pennsylvania (586).  The 550 organic farms in Minnesota manage 122,428 acres. Minnesota reported 106 operations with land in transition to organic production. Total acreage of 122,428 acres yielded total organic sales of $69 million, averaging $125,550 per farm in the state.  Minnesota was number one in the production of organic soybeans; in the top three for organic corn, oats, and barley; and in the top 10 for organic dry beans, buckwheat, flax, hay, oats, field peas, rye, sunflowers, wheat, dairy, and beef.~g.b.

By Greg Bowman

Posted March 19, 2010

Organic agriculture has arrived as a strong player in American farming. The US Department of Agriculture recently released the data from the first ever state-by-state census of organic farming. The results show that the average organic farm was more profitable in 2008 than the average for all farms in 2007—the most recent all-farm data available.

Organic farms had higher net income in 2008 than the USDA’s figures for all farms in 2007, the latest all-farm numbers, reported by the National Agricultural Statistics Service (NASS). The 14,540 organic farms reporting in had an estimated average net income that was $20,249 per farm per year higher than the all-farm figure. (Net income is total sales less expenses.)

“This shows that organic production systems were more profitable than conventional farms during this period, while also improving the soil, conserving energy, and sequestering more carbon,” said Jeff Moyer, farm director for the Rodale Institute. “This is exciting data shows the pioneering achievements of this type of farming. “
 
The organic farms had average annual sales of $217,675 (compared with the $134,807 average for all U.S. farms in 2007), and higher average annual expenses of $171,978 ($109,359 for all farms.

Total retail organic food sales for 2008 were $21.1 billion, according the USDA’s Economic Research Service. 

Organic: It’s in there!

At a time when the entire US food system is getting much more attention due to food recalls and movies targeting the downsides of industrial production systems, Moyer sees this survey data as the vindication of the long build-up in the integrity of the organic movement.

“As consumers and food service professionals learn more about conventional food production, they see things they don't like,” he noted. “They’re demanding a better product: more information, humane treatment, cows on grass, traceability, an auditable trail from field to store. Consumers are beginning to realize that when they buy a product that contains the USDA Organic Seal, these concerns are already addressed.”

The USDA worked with 25,000 returned surveys on 2008 farming and sales from three types of organic farming operations: fully certified farms, those transitioning to organic production (at least a three-year process), and those classified as “exempt” from formal certification because their organic sales were less than $5,000. (Sidebar: Exempt: rules but no label)

Of the 14,540 organic farms and ranches, 10,903 were USDA-certified organic or in transition, while 3,637 were exempt.  The latter category of farms is not inspected, but are required to follow the National Organic Program (NOP) standards if they use the term “organic.”

State by state

In seven widely dispersed states, organic farming makes up 100 percent of the income for more than 20 percent of the organic famers (of states with 30 or more organic farms). In descending order:

1. New York, 25 percent
2. Vermont, 24 percent
3. Pennsylvania, 23 percent
4. Arizona and Arkansas, 22 percent
5. Indiana, 21 percent
6. Montana, 20

California is by far the organic heavyweight with is extensive agricultural land, infrastructure and long growing season. Two Northwest states plus Texas and Pennsylvania round out the top five in organic sales.

Sales volume categories

Annual sales per farm rankings is another way the NASS census surveys groups farms, using groupings of less than $1,000 at the small end to $500,000 or more for the largest volume marketers. Nationwide:
- There were the most farms in the $100,000 - $249,000 range. Here, 2,078 organic farms had total organic sales of $337 million
- The highest combined sales total came from the largest sales volume farms, those with $500,000or more in annual sales. Here, 1,077 farms had $2.2 billion in organic sales.

Considering size and income at the smaller end, the 3,714 farms reporting under $5,000 in annual sales per farm combined for sales of just over $7 million in 2008. These comprise 25 percent of the total number of US organic farms. 

Their sales were less than 1 percent (0.2 percent) of the total reported organic sales of $3.17 billion in 2008. By contrast, the $500,000 and up category of farms, noted above, provided 72 per cent of that year’s sales.

Variation in marketing

The concentration of smaller operations within the organic producer community is also reflected in marketing data, with many more transactions taking place closer to home, but with the greater volume of organic products going to wholesale.

Most U.S. organic producers sold their products locally, with 44 percent of sales taking place less than 100 miles from the farm. Nearly 83 percent of total organic sales were to wholesale channels, including processors, millers and packers. Just over 10 percent of sales were direct to retail operations, including supermarkets.

Exempt: rules but no label The under-$5,000 exemption from certification is meant for direct-to-consumer sales. These farmers have to follow the organic standards (including the paperwork documenting that they qualify for the exemption and that their production methods are in compliance). Exempt producers may not use the USDA Organic seal, cannot describe their products as "certified organic," and cannot sell their products as organic ingredients to be processed by others. Details: Rodale Institute  Organic Transition Course

The skew toward wholesale channels shows stretch to meet consumer demand for organics.“It’s worth noting that only 10 percent of the reported sales were made as ‘direct to consumer" sales, with more than 80 percent of the products going to the wholesale market,” said Jeff Moyer of the Rodale Institute. “This demonstrates a real maturity in the marketplace and a demand from consumers for a greater array of products that can only come from processing or distributing across long distances.”

Given the business climate in 2010, the bullish attitude of organic farmers surveyed in 2008 seems remarkable. “More than 37 percent said they planned on expanding or growing their businesses,” Moyer noted. “This indicates a vision for a bright future from those who are inside the industry—not a rose-colored-glasses picture from marketing folks, but a real picture from those closest to the production.”

“Actually, I find it very rewarding that we actually had an organic survey section added to the ag census. This represents the true state of the organic industry and its rising position in the overall food-production industry,” Moyer said.

Movement maturing

The organic farming and food movement has been growing since J.I. Rodale and others began popularizing it in the 1930s. It launched as a definable market sector only in 2002 with the advent of the USDA’s National Organic Program This first organic-specific survey comes only six years into this era, and provides a snapshot of the most dynamic part of the US agricultural and food economy, covering its wide range of producers farming and marketing in many different ways.

The Institute’s Moyer, a member the USDA’s National Organic Standards Board, sees the census report as a milestone for the organic movement. “This is exciting data. It’s a direct indication of the pioneering movement of this type of farming that is blazing the trail to a new, more sustainable, and even regenerative food system.”

Greg Bowman is communications manager for the Rodale Institute.

Demand Organic overview of organic food and farming in the US, and how consumers can support farmers, retailers and processors to expand organic benefits.

USDA 2008 Organic Survey report and list of tables