MIRG Farming : Decision Making, Trends and Implications

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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
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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

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Alternative Systems the Decision Making Process
for the Family Farm

• You dont know who is right and who is wrong
  because theres conventional and theres organic
  and theyre all tugging in different directions
  as far as what you should do.
• Farmer Interview (Low-Intensity Grazier)

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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

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Bounded Rationality Information 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 ?
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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

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Alternative Systems the Decision Making Process
Organic
Grazier
Conventional
Amish
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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

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Amish Dairy

• -Milk by Hand
• Old Order Amish Settlements sell canned milk
• -Dont 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

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Introduction Data/Methodology
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Consider the PossibilitiesSurvey and
interviews results indicate that MIRG and Organic
are viable management systems
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Emergence of Alternatives MIRG grazing in WI
Please 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
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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 WIs 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.

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MIRG Profitability Research

• Tom Kriegls 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

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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 states 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

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Organic Profitability Research
USDA-ARMS Data - 2005
Overall--Mean organic herd size52 Mean
non-organic herd size 87 Parlor-- Mean organic
herd size106 Mean non-organic herd size
217 Non-Parlor-- Mean organic herd size37 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)
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Organic Dairy A Relatively Stable Pay Price
Dairy
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Organic Dairy Farms Prosperous and Modern
Interview w/ Dairy Farmer who transitioned to
organic---Economically speaking, compared to
where we were four years ago its 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

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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

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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

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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.

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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

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Discussion/Questions

• THANK YOU FOR YOUR INTEREST!
• CONTACT ?
• Caroline Brock
• ccbrock_at_wisc.edu

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Organic Dairy Farmers Clustering
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Trends -- Structure of Wisconsin Dairy
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Wisconsins Organic Dairy Farms Modern
Note the higher frequency of rotation than other
graziers. High intensity grazing as part of
their management strategy.