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 email@example.com 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.