Additional costs of organic milk production in Austria

In the years 1999 and 2000 few dairy farms converted to organic farming, whereas a number of organic dairy farms reverted to conventional production methods. It seems that the organic fanning was not profitable for these farms. The present study assesses the additional costs incurred through organic milk production under the current conditions (year 2000) and calculates the price premium which would be necessary to cover these additional costs and/or to achieve an increased income. Using linear planning models the gross output and costs of organic milk production are compared. The various models differ regarding the participation in various measures of the Austrian Agri-Environment Program under conventional management, the farm size, the crops grown, the average milk production of the herd and the costs to adapt the stable for converting to organic farming. Without price premium all scenarios showed additional costs for the production of organic milk. An increase in the number of organic dairy farms therefore requires the combined efforts of improved marketing, government support and producers to increase the volume of milk sold with a price premium, improve the subsidies for the adaptation of stables to the guidelines of organic farming and optimise the production methods of organic milk production.