Profitability of Organic Farming Systems Mr. James McDonnell, Teagasc Teagasc National Organic Conference 2009.

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Presentation transcript:

Profitability of Organic Farming Systems Mr. James McDonnell, Teagasc Teagasc National Organic Conference 2009

Outline Conventional v Organic Sources of financial information NFS EPM Teagasc Budgets Beef production Rearing systems Non breeding/ other systems Dairy production Tillage production

Conventional v Organic Why? Government 5% target Source of new organic participants Organic farming systems Are they difficult to manage? Do they have lower cost of production? Are they more profitable? How profitable are conventional systems?

Why is Profit important? The business needs profit to… Pay the manager/ investor ( i.e. YOU) Reinvest in new business assets so that the business will grow and generate more profit (building up cash is also reinvesting) Pay back lenders the principal that was borrowed to get the business to its current state

Cattle Systems in Ireland Cattle rearing systems Non Breeding / other systems

€420 / ha difference

€501 / ha difference

€100 / ha difference Beef Systems

TargetRangeNFS 2007 Physical Farm Size ha Stocking Rate LU/ha1.3 – Financial €/ha Gross Output Value Variable Costs Gross Margin Fixed Costs Net Profit excl. Premia Total Premia*> Organic EPM Results v NFS 2007

Organic Dairy Farming Comparison with Conventional Winter Milk E profit monitor results 2008

Winter Milk EPM V Organic EPM (Net Margin / Ha)

Winter Milk EPM v Organic EPM (Net Margin / Cow)

Organic Tillage Suits mixed farms 2 operations on most farms Good margins Crop rotation critical

Organic Tillage DescriptionProduction Levels Yield - tonnes/hectare (t/ac)4.0(1.6)5(2) Output at €350 per tonne Material Inputs €/ha Seed €930/tonne)205 Lime20 Machinery hire €/ha total Organic Scheme payment up to 55 ha *106 Gross Margin per ha (excl SFP)

Conventional Tillage Preliminary results Gross margin over materials (seed, spray, fertiliser etc) Winter Barley G.M/Ha€686 Winter Wheat G.M/Ha€710 Machinery costs average €

Take Home Messages Beef Huge variations in performance Organics more profitable Milk attractive up to 1.7L.U. per ha Tillage Excellent margins

Thank you for your attention