New cost of production analysis for organic crops and livestock should help farmers benchmark their operations against others in the sector.
The Organic Council of Ontario (OCO) in late April published cost of production (COP) analyses for dairy, salad greens, field crops and pastured poultry, in a project funded through the federal/provincial Canadian Agricultural Partnership.
Why it matters: Most organic producers must either rely on conventional-focused models that fail to incorporate key aspects of organic production, or not use COP modelling at all.
“I think most people know that making a living being a farmer is no easy task and that to be successful you need to manage risk,” said OCO Communications and Membership Manager Stuart Oke in a news release. “Having reliable data that can act as a foundation for a new enterprise is a game-changer.”
Each analysis draws on 2018 financial data provided by a group of organic farms, includes a discussion of trends and points out factors specific to organic production of the particular commodity.
Each also includes a simulator into which organic producers or those considering transition to organics can plug their own farm’s plans and projections.
The Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) has a COP model for organic field crops, but some deficiencies in that model are identified in the new OCO report.
Specifically, certified organic seed is seen as ubiquitous in the OMAFRA model but, in reality, a significant number of growers rely instead on farm-saved seed or untreated conventional seed. The cost for hand weeding of various crops is also cited by OMAFRA, but OCO found that no participating farms used hand weeding except in emergencies.
Dairy Farmers of Ontario and the Organic Meadow cooperative, meanwhile, both conducted organic-focused COP analyses. Results from those studies were not made public due to the small number of participating farms, although they were made available to OCO report author Dirk Brunsveld.
Brunsveld, a former banker who has since returned to take over his family’s organic dairy farm near Hamilton, told Farmtario “I’ve probably read hundreds of these (COP studies) but this is the first one I’ve conducted. I’m kind of obsessive about this.”
Examples of generally accepted COP principals that don’t necessarily apply in organics, as cited in the new models, include:
In analyzing the financial data from approximately 30 farms participating across the four commodities, OCO’s researchers determined some interesting trends.
Field crops report author Tom Manley writes that “large successful farms keep their crop rotation simple – three or four years with corn, soybeans, cereals, and cover crops. Despite the perceived agronomic benefits of niche crops such as buckwheat, oats, peas, hay, large farms go for…high-yielding, high-revenue crops, and short-term cover crops. The niche crops simply do not have the yield and the revenue potential to justify their place in the rotation.”
Arnold and Hsueh, meanwhile, discovered that paying the fee for organic inspection and carrying out the onerous record-keeping required for organic certification isn’t often worth it when it comes to pastured poultry – which, due to its place within Chicken Farmers of Ontario’s Artisanal production program is, by its nature, small in scale. Several participants aren’t certified, “however all of them used organic feed, and otherwise no major deviation from organic practices were identified,” they write.
Along with determining that investments in larger or higher-quality greenhouse technology reduce energy costs and labour costs, salad greens study author David Cohlmeyer discovered that, over the long term, it’s less costly to provide above-average wages to paid employees than it is to rely on “free intern” labour.
“It takes a lot of time each year to hire and train new workers, and.. paying a premium wage for committed local or migrant workers can reduce total labour and management costs by 30 per cent,” he writes. “Higher pay rates for more effective and experienced workers typically resulted in lower labour costs as a percentage of total costs.”