mirg farming : decision making, trends and implications caroline brock land resources phd student...
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MIRG Farming : MIRG Farming : Decision Making, Decision Making,
Trends and Trends and ImplicationsImplications
Caroline BrockCaroline BrockLand Resources PhD StudentLand Resources PhD Student
University of Wisconsin-MadisonUniversity of Wisconsin-MadisonPATS/Agricultural and Applied Economics AffiliationPATS/Agricultural and Applied Economics Affiliation
This research was partially funded in part by a grant from the Sustainable Agriculture Research and Education (SARE) Graduate Student Program
Introduction: Objectives Introduction: Objectives for Doctoral Researchfor Doctoral Research
Provide a descriptive picture of Wisconsin Provide a descriptive picture of Wisconsin alternative dairy sectors as well as confinementalternative dairy sectors as well as confinement
Explore factors that influence management Explore factors that influence management choice decision making (social, spiritual, choice decision making (social, spiritual, economic and ecological). You can help! This is economic and ecological). You can help! This is where I am at now.where I am at now.
Compare dairy sectors and identify factors that may Compare dairy sectors and identify factors that may
influence viability influence viability
Alternative Systems: the Alternative Systems: the Decision Making Process Decision Making Process
for the Family Farmfor the Family Farm
““You don’t know who is right and who is wrong You don’t know who is right and who is wrong because there’s conventional and there’s organic because there’s conventional and there’s organic and they’re all tugging in different directions as far and they’re all tugging in different directions as far as what you should do. “as what you should do. “
– – Farmer Interview (Low-Intensity Grazier)Farmer Interview (Low-Intensity Grazier)
Alternative Systems: the Alternative Systems: the Decision Making Process Decision Making Process
for the Family Farmfor the Family Farm The Economic Realm as a Starting BaseThe Economic Realm as a Starting Base
Unbounded Rationality vs Bounded RationalityUnbounded Rationality vs Bounded Rationality
Unbounded Rationality- assumes full information and Unbounded Rationality- assumes full information and timetime
In contrast, bounded rationality considers information In contrast, bounded rationality considers information constraints and social influences –rules of thumb, constraints and social influences –rules of thumb, often more concerned with losses than gains, often more concerned with losses than gains, anchoring on a small dimension of the problemanchoring on a small dimension of the problem
Bounded Rationality: Bounded Rationality: Information ConstraintsInformation Constraints
The UnknownAs we know, There are known knowns. There are things we know we know. We also know There are known unknowns. That is to say We know there are some things We do not know. But there are also unknown unknowns, The ones we don't know We don't know. —D. H. Rumsfeld Feb. 12, 2002, Department of Defense news briefing
What are the information “bounds” of alternative systems ?
MIRG and Organic –MIRG and Organic –Cases for Bounded Cases for Bounded
RationalityRationality Are both integrated systems w/ many Are both integrated systems w/ many
unknownsunknowns Minimal research support/ExtensionMinimal research support/Extension Thus, mostly relies on localized knowledge Thus, mostly relies on localized knowledge
(tacit vs codified)(tacit vs codified) Social networks may have significant Social networks may have significant
influence in adoption decisionsinfluence in adoption decisions
Alternative Systems: the Alternative Systems: the Decision Making ProcessDecision Making Process
Amish
Conventional
Organic Grazier
How the Amish Fit into the Scene-Overall, 5-7% percent of Wisconsin
dairy (Cross) (also a significant fraction of the dairy farms in the traditional dairy regional PA, IN, OH and NY)
--Amish may comprise a significant fraction of MIRG growth in WI (but especially in IN and OH)
-State average herd size 19 cows
-Less inherited the farm because of settlement history
-Some organic and some are MIRGers
--Milk by Hand- Old Order Amish Settlements sell canned milk--Don’t use rBST, very little vet services as well as other modern technologies--Average Herd Size 14 Cashton = early settlers mostly from Ohio Hillsboro = early settlers mostly from IN --They allow electric fence and were familiar with MIRG
Amish Dairy
Introduction: Data/Methodology
Consider the PossibilitiesConsider the Possibilities
Survey and interviews Survey and interviews results indicate that results indicate that
MIRG and Organic are MIRG and Organic are viable management viable management
systems…systems…
7.3
13.9 14.6
21.8 22.425.0 26.0
30,00028,000
25,000
22,000
19,10016,900 15,316
0
10,000
20,000
30,000
0
10
20
30
40
50
1993 1995 1997 1999 2001 2003 2005
Tota
l num
ber o
f dai
ry fa
rms
Perc
ent o
f dai
ry w
hich
are
MIR
G
Year
Figure 3. Use of Management Intensive Grazing
Emergence of Emergence of Alternatives: MIRG Alternatives: MIRG
grazing in WIgrazing in WIPlease Note
In 2005, organic farmers comprised 7.5% of the MIRG sector
In 2002, Amish were 14% of the MIRG sector
Organic plus Amish were 20-25% of the MIRG sector
MIRG sector may be underestimated because of minimal Amish survey participation in 2005
Prevalence of Grazing in Prevalence of Grazing in WIWI
24% of WI dairy farmers use pasture intensively 24% of WI dairy farmers use pasture intensively (rotating cows on pasture more than once a (rotating cows on pasture more than once a week)week)
Low cost entry into farming, good for smaller Low cost entry into farming, good for smaller operations (Over 80% of WI’s dairy farms are operations (Over 80% of WI’s dairy farms are fewer than 100 cows) & easier transition to fewer than 100 cows) & easier transition to organics given the importance of ‘grazing’ to the organics given the importance of ‘grazing’ to the strategystrategy
Also primarily located in SW/WC Wisconsin Also primarily located in SW/WC Wisconsin where organics are growing fastest.where organics are growing fastest.
MIRG Profitability Research Tom Kriegl’s research indicates grazing is highly profitable
with selected farms (e.g. NIFO/cow Grazier--$737.18 NIFO/cow Grazier--$737.18 Conventional--$521.50)Conventional--$521.50)
NIFO= Net Farm Income from Farm OperationsNIFO= Net Farm Income from Farm Operations Survey (QOL/PATS) research indicate highest quality of
life (especially amongst the most intense graziers = large scale confinement)
Recent USDA ARMS 2005 data suggests that it is not competitive but there is not enough sample size (40 graziers in the whole Midwest region) to make definitive call
Wisconsin is an ideal in Organic Wisconsin is an ideal in Organic Milk ProductionMilk Production
WI has:WI has: The largest number of organic dairy farms in the The largest number of organic dairy farms in the
US, 350-400.US, 350-400. That is ~ 2-3% of the state’s 14,343 dairy farms.That is ~ 2-3% of the state’s 14,343 dairy farms. Good industry support for organic farmers: Good industry support for organic farmers:
Organic certifying agencies (MOSA), Organic Organic certifying agencies (MOSA), Organic Valley members, other farmers, DATCPValley members, other farmers, DATCP
_ Please note this growth came out independently _ Please note this growth came out independently of university/extension supportof university/extension support
Organic Profitability Research
Farm Income Per Cow
$675
$884$837
$588
$756$719
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Parlor Non-Parlor Total Sample
Far
m i
nco
me
per
co
w
Non-organic
Organic
Overall--Mean organic herd size=52; Mean non-organic herd size = 87Parlor-- Mean organic herd size=106; Mean non-organic herd size = 217Non-Parlor-- Mean organic herd size=37; Mean non-organic herd size = 49
Tom Kriegl Seven Year MeanNIFO/cow Grazier--$737.18 Organic--$732.03 Conventional--$521.50 NIFO= Net Farm Income from Farm Operations Small and Non-Random (Only 6-17 organic farms)
USDA-ARMS Data - 2005
Dairy
Organic Dairy: A Relatively Stable Pay Price
Organic Dairy Farms– Prosperous Organic Dairy Farms– Prosperous and Modern and Modern
Net Farm IncomeNet Farm Income 90% of organic satisfied-very satisfied vs 15-18% of 90% of organic satisfied-very satisfied vs 15-18% of
non-organic.non-organic. Quality of LifeQuality of Life
75% of organic in the upper two satisfaction answers 75% of organic in the upper two satisfaction answers vs 45%vs 45%
Herd HealthHerd Health 75% of organic in the upper two satisfaction responses 75% of organic in the upper two satisfaction responses
vs 53% in confinement operations.vs 53% in confinement operations. Organic also relatively “modern”Organic also relatively “modern”
High rates of pit parlor, retro freestall adoption, keep High rates of pit parlor, retro freestall adoption, keep production records and use TMR at high rates, also production records and use TMR at high rates, also relatively intense pasture and manure management relatively intense pasture and manure management practicespractices
Interview w/ Dairy Farmer who transitioned to organic---Economically speaking, compared to where we were four years ago it’s a night and day difference.
MIRG - To be or Not to be - MIRG - To be or Not to be - Factors that potentially Factors that potentially
influence the “Bounds” of influence the “Bounds” of decision makingdecision making Parental or child Influence (especially if still Parental or child Influence (especially if still
on the home farm)on the home farm) Social networksSocial networks Structural barriers-may be real or perceived? Structural barriers-may be real or perceived?
(land area needed, land situation, labor (land area needed, land situation, labor required, road barriers), price of corn?required, road barriers), price of corn?
Want to see results from farm like their ownWant to see results from farm like their own Shifting in the way you think about the farmShifting in the way you think about the farm
Organic To be or Not to Organic To be or Not to be- Factors that be- Factors that
Influence - Factors that Influence - Factors that potentially influence the potentially influence the
“bounds” of decision “bounds” of decision makingmaking Stronger reactions ( +/ -) than for MIRG (more Stronger reactions ( +/ -) than for MIRG (more
clearly defined)clearly defined) Structural barriers-may be real or perceived? Structural barriers-may be real or perceived?
(animal health care, transition costs, book (animal health care, transition costs, book work, feed costs*, road barriers)work, feed costs*, road barriers)
Amongst intensive graziers– agronomic Amongst intensive graziers– agronomic arguments as well as socialarguments as well as social
Cashton #1- “People cheat with organic! Not Amish but some other people do it… It is a temptation for people to be dishonest the way it is set up..”
Hillsboro #1- “I would have to buy some organic straw and I like to get it from a local fellow that I know.”
Distinctive characteristics in adoption of organic and graziers amongst different (perceptions of govt, cheating with organic, milk is milk)
Pasture Based Dairy-- Pasture Based Dairy-- Needs for the FutureNeeds for the Future
Research (ideally regional) which explores Research (ideally regional) which explores perceptions and the “realities” of organic and perceptions and the “realities” of organic and MIRG MIRG
Need for research which looks at individual Need for research which looks at individual variation within organic– i.e. what makes variation within organic– i.e. what makes MIRG/organic farms successful. Also looks at MIRG/organic farms successful. Also looks at differences amongst Amish/Mennonite differences amongst Amish/Mennonite settlementssettlements
Research which follows farmers through the Research which follows farmers through the transition into MIRG and organictransition into MIRG and organic
Discussion/QuestionsDiscussion/Questions
THANK YOU FOR YOUR INTEREST!THANK YOU FOR YOUR INTEREST! CONTACT ?CONTACT ?
Caroline BrockCaroline Brock
Organic Dairy Farmers: Clustering
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
1 to 49 50 to 99 100 to 199 200 or more
Perc
ent
Herd Size Categories: Source Census of Agriculture 1987 (Total 36,459 farms), 1997 (Total 21,997 farms), and NASS-USDA 2006 (Total 14,900 farms)
Figure 1. Percent of Wisconsin Dairy Farms by Herd Size Category 1987, 1997, 2006
1987
1997
2006
Trends -- Structure of Wisconsin Dairy
Wisconsin’s Organic Dairy Wisconsin’s Organic Dairy Farms – ModernFarms – Modern
Note the higher frequency of rotation than other graziers. High intensity grazingas part of their management strategy.