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Stability in Organic Milk Farm Prices: A Comparative Study

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  • Su, Ye
  • Brown, Scott
  • Cook, Michael L.

Abstract

The organic milk pay price is more stable year round and increases every year. However, the conventional milk price varies within the year and from year to year. As an emerging segment of the milk industry, consumer demand for organic milk is increasing rapidly. The growth in demand relative to supply provides organic milk producers and processors large premiums over the conventional milk price. Many conventional dairy farms have converted to organic operations for the more stable price. The objective of this study is to understand the stability of organic milk price relative to conventional milk price, differences in pricing mechanisms between organic milk and conventional milk, and shed light on the policy implications for organic milk and conventional milk markets. Farm price and retail price of organic milk and conventional milk are compared and analyzed. The comparative stability and volatility of the farm and retail price of organic milk and conventional milk are investigated. Seasonality and volatility of milk price are examined. The supply and demand patterns and profit margins are compared between conventional and organic milk. Additionally, we explore the market structures of the organic milk industry. Our analysis develops hypothesis for future work on the organic milk pay price phenomenon.

Suggested Citation

  • Su, Ye & Brown, Scott & Cook, Michael L., 2013. "Stability in Organic Milk Farm Prices: A Comparative Study," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150735, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:150735
    DOI: 10.22004/ag.econ.150735
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    Cited by:

    1. Tanushree Haldar & A. Damodaran, 2022. "Can cooperatives influence farmer’s decision to adopt organic farming? Agri-decision making under price volatility," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(4), pages 5718-5742, April.
    2. Luz Maria Castro & Baltazar Calvas & Thomas Knoke, 2015. "Ecuadorian Banana Farms Should Consider Organic Banana with Low Price Risks in Their Land-Use Portfolios," PLOS ONE, Public Library of Science, vol. 10(3), pages 1-23, March.
    3. Araba, Narjiss, 2022. "Organic markets: a safe haven from volatility," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 321209, Agricultural Economics Society - AES.
    4. Law, Jonathan M., 2020. "Organic and Conventional Milk Production Practices and Costs between 2005 and 2016: Comparisons and Contrasts by Farm Size, Region and Pasture Use," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304615, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    Demand and Price Analysis; Livestock Production/Industries; Productivity Analysis;
    All these keywords.

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