The Economics of Pasture Raised Animal Products: Food, Markets and Community


July 13, 2007 - David S. Conner & <>

Small and mid-sized farms are increasingly recognized for their significant role in the social and economic well-being of rural communities. Coupled with this is a growing consumer demand to “know where the food comes from.” In the meat and dairy industry there is growing consumer demand for products that are hormone and antibiotic free, as well as ecologically and humanely produced. This paper examines the current market and potential future for pasture raised animal products.


While agricultural industrialization has achieved the goal of high yields and low food prices (Antle, 1999), there are a number of documented adverse effects on the economies, communities and environments of rural America. Groundbreaking work by Goldschmidt (1947) and others (Lobao (1990); Welsh and Lyson (2001); MacCannell (1988); Durrenberger and Thu (1996); Lyson, et al. (2001)) illustrates the importance of small to mid-sized farms to the social and economic well-being of rural communities. Of particular consequence appear to be the existence of an independent and entrepreneurial middle class of farms, such as full time owner operated family farms.

Small and mid-sized farms utilizing rotational grazing and other pasture-based production technologies are uniquely positioned to maximize both the socio-economic and ecological services to rural America. Furthermore, they are well-positioned to meet growing consumer demand to “know where the food comes from,” for meat and dairy products with key consumer-requested attributes such as hormone and antibiotic free, ecologically and humanely produced, and “food with a farmer’s face on it.”

Data from recent agricultural censuses shows that while small (< 50 acres) and large (>1,000 acres) farms are maintaining or even increasing their numbers, mid-sized farms are declining precipitously in number. In the north central region, almost ten percent of these farms went out of business between 1997 and 2002. A major reason is the lack of appropriate markets that generate sufficient profit for these farms. Many small farms subsist by tapping niche markets for specialty products and using face to face direct sales channels; mid-sized farms produce too large a volume to rely solely on these markets, yet sell too few units to survive on the slim margins available in commodity markets and contract agriculture.

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