Profitability of organic and conventional cow-calf operations under Swedish conditions

Abstract

In order to maintain the high natural values of Swedish semi-natural pasture, suckler cow numbers must increase, but numbers are more likely to decrease due to low profitability, changes to the EU support system and increasing wage levels. This study sought to identify production models for cow-calf operations with sufficient profitability to pay at least stipulated farm workers wage. In the calculations, the income from weaned calves and EU support was reduced by operating costs, excluding labour. The surplus was divided by hours spent on labour, resulting in a return to labour per hour. The calculations were carried out in varying future scenarios where the Common Agricultural Policy is changing. The results showed that organic production models created a higher return to labour than conventional production models. One reason for this is the environmental payment for organic farming. Another reason is that organic production maintains more acreage, equalling higher environmental payments and other EU support per suckler cow. Other more profitable production models included spring calving, heavy cows and winter feed based on silage. Some organic production models gave a return to labour above the stipulated farm workers wage. However, if the single farm payment scheme is phased out and not replaced by an increase in environmental payments, the return to labour will be at best half the stipulated farm workers wage. © 2012 The Author(s).