Benefits and Realities of Organic Feeding Systems for Cattle
For the last two decades, producers have responded to the shift in consumer demand for alternatives to conventional beef and dairy products. Since 2008, organic sales have tripled, and the grass-fed and natural niche markets have grown.
While some producers transition for personal or philosophical reasons, higher premiums have enticed others. But recently, the shift toward organic and specialty beef and dairy production has slowed. Today’s landscape forces producers to consider a few things before changing their farm or ranch.
Specialty Beef and Dairy Markets Show Promise
Producers have sold organic beef and milk for decades. However, the market share for organic took off after the USDA established the National Organic Program in 2002. Since first tracked in 2008, sales tripled, and consumer demand for organic milk and beef outweighed producers' ability to keep pace.
However, new data shows the market may be cooling in recent years. USDA’s 2022 Organic Census showed an 8% growth in organic cattle sales and a 3% growth in organic milk sales between 2019 and 2021. A fraction of the growth experienced in the previous census years (2016-2019).
Organic and Grass-fed Beef Markets
“There has been a small growth in demand for organic beef — organic anything really,” said Travis Muliniks, Glenn & Mildred Harvey Professor of Beef Cattle Management at the University of Oregon. “We’ve especially seen an uptick in grass-fed beef consumption in the restaurant industry.” Muliniks believes regional access to markets with high demand for specialty beef products drives this growth.
Today only one-fifth of grass-fed beef is sold directly to consumers or through restaurants, specialty grocers and natural food stores. Proximity to markets and consumers willing to pay a premium is essential in this direct-to-consumer structure. In this setting, producers can set their prices.
The remaining 80% of grass-fed cattle sales come through branded programs, such as those from the largest meat packers: JBS Foods, Tyson and Cargill. Researchers at South Dakota State University found producers selling through branded programs receive significantly less premium than direct-to-consumer products.
Mulliniks also cites data he’s seen recently on the evolving premium market for grass-fed beef. “[The producer is] giving up production capacity and efficiency, and the cost of production is increasing. The data showed producers are losing money because the premium is not always big enough.”
It’s a trend reflected in the organic dairy industry, too.
Organic and Specialty Dairy Markets
Organic dairy, which holds a larger and more established share of the organic market than beef, finds market stability in long-term relationships with processors and more consistent consumer demand. However, the supply may outweigh the demand, with more producers entering the market.
“There was a pretty steady increase in organic dairy production from the 2000s through the mid-2010s, but that trend leveled off, and the number of organic dairies has even decreased in recent years,” said Jenifer Cruickshank, Assistant Professor and Dairy Extension Specialist at Oregon State University.
Recent USDA Organic Census data shows this trend playing out across the country. Between 2019 and 2021, certified organic acres shrunk 11%, and sales of organic milk during the same time grew only 3%. In 2021, the price of organic milk dropped 6%, bringing it more in line with conventionally produced milk and confirming Cruickshank’s point: the margins are thinning.
Herd Health and Nutritional Impacts
Despite the perception among consumers that organic products are healthier and organic farming is better for the environment, there’s little data to confirm it’s true.
Regardless of the label, beef production in the United States is grass-based. Animals spend roughly 75% of their life on grass if for little other reason than the rumen efficiently converts forage into energy. In most systems, grain use depends on the animals' needs.
“We feed grain based on the energy value of the diet; forage may need to be supplemented,” said Mulliniks. However, production styles like organic often limit what producers can and can’t feed their cattle.
There is little to no data to support a nutritional benefit to cattle grown on organic feedstuff. However, research suggests an all-forage diet reduces rumen acidity, improving digestive health.
In beef cattle, Mulliniks said grain-fed cattle may experience higher incidences of bloat and acidosis than their grass-fed counterparts, decreasing digestion and nutrient absorption.
In dairy cattle, organic grain often supplements forages. Still, there are minimum requirements for grazing and dry matter intake, which could prove challenging for some farms with limited access to land.
“You would have to set up your farm for grazing,” Cruickshank said. “Producers may struggle to figure out how to lay out their pastures and get cows to the parlor. And getting irrigation to each pasture is essential during dry months.” Cruickshank says it’s doable. She’s seen 1,500 cow dairies thrive as organic farms but says it’s not feasible at every location.
The slowdown in transitioning to organic has become so severe that the federal government is taking action to buoy the market. Supporting farmers and ranchers who want to transition to organic became a top priority for USDA in 2022 when they announced a $300 million investment in a new Organic Transition Initiative.
This program will aim to build new markets and better streams of income for producers and make transitioning to organic less cost-prohibitive for producers by covering costs associated with transitioning to organic and providing technical support for producers.
With market stagnation and shrinking premiums, an obvious but ambiguous hurdle to changing a farm or ranch's production system is the increased cost of production. It’s widely assumed the premium for specialty label products will pay back the upfront costs over time. However, that may not always be true for every producer.
Every producer faces choices. Pursuing a niche marketing label for your beef or dairy operation is a choice. With the organic market cooling a touch, producers can evaluate their operation, local markets and preferred production style, and then make the right choice for their family and business.
By Laura M. Brenner
