Organic Dairy Project Funded

Farm Business Management Update, August/September 2006

By Denise Mainville (mainvill@vt.edu), Assistant Professor, Agricultural Marketing, Department of Agricultural and Applied Economics, Virginia Tech

USDA’s Federal-State Marketing Improvement Program announced on July 14 the funding of a research and education program on organic dairy markets to Virginia Tech through the Virginia Experiment Station. The award, 1 of 25 proposals which were awarded a total of $1,330,530, will analyze consumer demand for organic milk products using household level data on national consumption over several years. Project investigators include Drs. Denise Mainville, Gordon Groover and Everett Peterson, all of Agricultural and Applied Economics, Virginia Tech, and Dr. Oral Capps, of Texas A&M University. Doctoral student Zelalem Chala will undertake much of the analysis at Virginia Tech.

Organic dairy is a rapidly growing market segment, and as major processors such as Organic Valley and Horizon establish plants in the Southeast, offers obvious opportunities to Virginia producers. At the same time, however, transition to organic dairy is a costly and time-consuming process, and producers face the risk of making the investment to produce organic milk only to find that the market is no longer as attractive by the time they obtain certification as it is currently. The demand analysis will aid producers in making the decision of whether to produce organic milk by identifying key factors determining demand, such as regional and demographic consumption patterns of organic consumers and responses to changes in prices and their own income levels. As producers understand the demand side of the market, they will be in a better position to anticipate what market conditions might be by the time they make the transition to organic milk production.

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