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					MIRG Farming : Decision
  Making, Trends and
     Implications
                   Caroline Brock
          Land Resources PhD Student
        University of Wisconsin-Madison
 PATS/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 for
              Doctoral Research
   Provide a descriptive picture of Wisconsin
    alternative dairy sectors as well as confinement

   Explore factors that influence management
    choice decision making (social, spiritual,
    economic and ecological). You can help! This is
    where I am at now.

   Compare dairy sectors and identify factors that may
    influence viability
   Alternative Systems: the Decision
    Making Process for the Family
                 Farm

“You don‟t know who is right and who is wrong
  because there‟s conventional and there‟s organic
  and they‟re all tugging in different directions as far
  as what you should do. “
    – Farmer Interview (Low-Intensity Grazier)
   Alternative Systems: the Decision
    Making Process for the Family
                 Farm
 The Economic Realm as a Starting Base
 Unbounded Rationality vs Bounded Rationality

 Unbounded Rationality- assumes full information and
  time
In contrast, bounded rationality considers information
  constraints and social influences –rules of thumb,
  often more concerned with losses than gains,
  anchoring on a small dimension of the problem
Bounded Rationality: Information
         Constraints
The Unknown
As we know,
There are known knowns.
There are things we know we know.
We also know
There are known unknowns.         What are the information
That is to say
We know there are some things
                                  “bounds” of alternative systems    ?
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
     MIRG and Organic –Cases for
        Bounded Rationality
   Are both integrated systems w/ many
    unknowns
   Minimal research support/Extension
   Thus, mostly relies on localized knowledge
    (tacit vs codified)
   Social networks may have significant
    influence in adoption decisions
Alternative Systems: the Decision
         Making Process


      Organic           Grazier   Conventional




                Amish
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
           Amish Dairy
--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
  Introduction:
Data/Methodology
   Consider the Possibilities

  Survey and interviews results
indicate that MIRG and Organic
     are viable management
            systems…
                                  Emergence of Alternatives:
                                    MIRG grazing in WI
                                                                                                                                             Please Note
                                         Figure 3. Use of Management Intensive Grazing
                                                                                                                                             In 2005, organic farmers
                                       30,000
                                                                                                                                             comprised 7.5% of the
                                  50
                                                28,000
                                                                                                      30,000                                 MIRG sector
                                                         25,000




                                                                                                               Total number of dairy farms
                                                                                                                                             In 2002, Amish were
Percent of dairy which are MIRG




                                  40                              22,000
                                                                           19,100
                                                                                    16,900   15,316   20,000                                 14% of the MIRG sector
                                  30

                                                                                     25.0    26.0                                            Organic plus Amish
                                  20                               21.8     22.4
                                                                                                      10,000                                 were 20-25% of the
                                                 13.9     14.6                                                                               MIRG sector
                                  10
                                        7.3
                                   0                                                                  0
                                                                                                                                             MIRG sector may be
                                       1993     1995     1997     1999     2001     2003     2005                                            underestimated because
                                                                  Year                                                                       of minimal Amish
                                                                                                                                             survey participation in
                                                                                                                                             2005
     Prevalence of Grazing in WI
   24% of WI dairy farmers use pasture
    intensively (rotating cows on pasture more
    than once a week)
   Low cost entry into farming, good for
    smaller operations (Over 80% of WI‟s
    dairy farms are fewer than 100 cows) &
    easier transition to organics given the
    importance of „grazing‟ to the strategy
   Also primarily located in SW/WC
    Wisconsin 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 Conventional--$521.50)
    NIFO= 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 Milk
                 Production
   WI has:
     The largest number of organic dairy farms in the US, 350-400.

     That is ~ 2-3% of the state’s 14,343 dairy farms.

     Good industry support for organic farmers: Organic certifying
      agencies (MOSA), Organic Valley members, other farmers,
      DATCP

     _ Please note this growth came out independently of
       university/extension support
     Organic Profitability Research
                                         USDA-ARMS Data - 2005
                                                          Farm Income Per Cow

                                $1,000
                                                             $884
                                 $900                                           $837
                                 $800                               $756
                                                                                       $719
                                            $675
          Farm income per cow




                                 $700
                                                   $588
                                 $600
                                                                                               Non-organic
                                 $500
                                                                                               Organic
                                 $400

                                 $300

                                 $200

                                 $100

                                   $0
                                              Parlor          Non-Parlor        Total Sample


      Overall--Mean organic herd size=52; Mean non-organic herd size = 87
      Parlor-- Mean organic herd size=106; Mean non-organic herd size = 217
      Non-Parlor-- Mean organic herd size=37; Mean non-organic herd size = 49
Tom Kriegl Seven Year Mean
NIFO/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)
        Organic Dairy: A Relatively Stable Pay Price


Dairy
Organic Dairy Farms– Prosperous and Modern
 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.
    Net Farm Income
        90% of organic satisfied-very satisfied vs 15-18% of non-organic.
    Quality of Life
        75% of organic in the upper two satisfaction answers vs 45%
    Herd Health
        75% of organic in the upper two satisfaction responses vs 53% in
         confinement operations.
    Organic also relatively “modern”
        High rates of pit parlor, retro freestall adoption, keep production
         records and use TMR at high rates, also relatively intense pasture
         and manure management practices
MIRG - To be or Not to be - Factors
  that potentially influence the
  “Bounds” of decision making
   Parental or child Influence (especially if still
    on the home farm)
   Social networks
   Structural barriers-may be real or
    perceived? (land area needed, land
    situation, labor required, road barriers),
    price of corn?
   Want to see results from farm like their own
   Shifting in the way you think about the farm
     Organic To be or Not to be-
    Factors that Influence - Factors
     that potentially influence the
     “bounds” of decision making
   Stronger reactions ( +/ -) than for MIRG (more
    clearly defined)
   Structural barriers-may be real or perceived?
    (animal health care, transition costs, book
    work, feed costs*, road barriers)
   Amongst intensive graziers– agronomic
    arguments as well as social
  Distinctive characteristics in adoption
  of organic and graziers amongst
  different (perceptions of govt, cheating
  with organic, milk is milk)
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.”
Pasture Based Dairy-- Needs for
          the Future
   Research (ideally regional) which
    explores perceptions and the “realities” of
    organic and MIRG
   Need for research which looks at
    individual variation within organic– i.e.
    what makes MIRG/organic farms
    successful. Also looks at differences
    amongst Amish/Mennonite settlements
   Research which follows farmers through
    the transition into MIRG and organic
        Discussion/Questions
   THANK YOU FOR YOUR INTEREST!
   CONTACT ?
    Caroline Brock
    ccbrock@wisc.edu
Organic Dairy Farmers: Clustering
Trends -- Structure of Wisconsin Dairy
                            Figure 1. Percent of Wisconsin Dairy Farms by
                                 Herd Size Category 1987, 1997, 2006


        70.00%

        60.00%

        50.00%
   Percent




        40.00%                                                                                            1987

                                                                                                          1997
        30.00%
                                                                                                          2006
        20.00%

        10.00%

             0.00%
                        1 to 49              50 to 99            100 to 199          200 or more
                     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)
  Wisconsin’s Organic Dairy Farms –
               Modern




Note the higher frequency of rotation than other graziers. High intensity grazing
as part of their management strategy.

				
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