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The Pros and Cons of Organic Production

by 5m Editor
13 July 2001, at 12:00am

By Gene Tinker, University of Minnesota Extension Service - Hog producers are wondering how to compete in the future, and the answer may lie in their willingness to change with the industry. This brief article looks at the pros and cons of going organic.

"Today only 17 percent of hogs are sold on the open market," says Gene Tinker, swine business management educator with the University of Minnesota Extension Service. As recently as 1997, 43 percent of hogs were sold on the open market.

"The family farm producers I work with are wondering how to reposition themselves," Tinker says. "They remember the extremely low prices of 1998-99 and want to do something different."

Many hog marketing contracts base the price on the open market, which has a decreasing percentage of animals determining the price. Tinker says the open market accounts for pricing 71 percent of market hogs, but only 17 of the 71 percent represent a negotiated price.

Demand for organic and natural foods continues to increase at roughly 10 percent a year, Tinker says. He lists the pros and cons for producers thinking of producing alternative and organic pork.

Pros include:
  • You're not in a commodity market, so you can usually get a better price.
  • The consuming public may view the product as "better."
  • You can use facilities that don't fit the mold of today's commodity production.
Cons include:
  • These markets often require that specific production practices be followed and specific feeds be fed.
  • Production costs are often greater. According to an Iowa State University study, it requires $55 per hundred to break even with organic production.
  • Weather often has a greater impact on production, with production tending to be seasonal. "But consumers want the product all the time," Tinker says.
  • Treatment for illness may prohibit the animal from meeting the specialty market requirements.
  • Organic production requires organic feedstuffs, and the cost of organic protein sources has recently increased due to greater demand.
  • Organic feedstuffs may not be readily available in all areas.
  • You're apt to have a certifying agency checking on production practices.
  • And, all production may not be marketed in the specialty market, so the extra specialty product must be sold in the commodity market for the commodity price.
Source: University of Minnesota Extension Service - July 2001
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