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Federal grant will allow U of M and partners to study economics of organic farm transition

October 7, 2010

Minnesota economists will study the economic costs associated with transitioning from traditional to organic farming through a new $1.2 million grant from the U.S. Department of Agriculture.

The four-year project is aimed at gathering data about costs and returns for farmers making the switch to organic farming, said Robert King, professor of applied economics at the University of Minnesota and leader of the project. Data will come from transitioning and recently certified organic farmers who enroll in the Minnesota State Colleges and Universities Farm Business Management Education program. The project also will develop print and online educational materials that will help transitioning farmers make long-term planning decisions.

U.S. producers are turning to certified organic farming systems as a potential way to lower input costs, decrease reliance on nonrenewable resources, capture high-value markets and boost farm income. While organic farming is among the fastest-growing segments of agriculture, few public studies have been done on the economic costs and returns for those who make the transition.

"As more and more farmers consider making the transition to organic production, we're seeing that uncertainty about the costs of transitioning and the return on those costs is a significant impediment," King said. "Data about the experiences and lessons learned from those who have made the transition will help other farmers decide whether to make this change."

The project will include training on fundamentals of organic transition for the 71 instructors in the state colleges and universities system's Farm Business Management Education program. The instructors will work closely with about 80 participating farmers over the life of the study to track farm financial records, offer advice and develop benchmarks for future organic transitions. The Minnesota Department of Agriculture will help identify and recruit transitioning farmers to participate in the project and will administer scholarship awards, which will cover up to 90 percent of the farmers' participation costs.  Individual farm data will be aggregated to ensure confidentiality, then analyzed and shared locally and nationally through the Center for Farm Financial Management's FINBIN website, as well as through publications and presentations developed specifically for this project.

"The farmers who participate will gain a deeper understanding of their own financial condition during the years of transition," King said. "Their shared experiences will also help other farmers developing transition plans, lenders evaluating business plans and loan applications from transitioning farmers, and policymakers assessing program needs."

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