Organic food is profitable for farmers as well as retailers.

A new report, "2007 Organic Farm Performance in Minnesota," found that Minnesota’s organic farmers are benefiting from increased profit margins of organic produce sales.

The report, released this week by the Minnesota Department of Agriculture, aims to prove whether the current boom in organic food sales is extending to those who grow the produce, information the authors claim has not been systematically collected before.

The report relies on data from 65 farms, slightly less than the 71 that participated in 2006. Organic farms seem to do well compared with their conventional counterparts, according to the study.

Gross income of conventional farms amounted to about $600,000 compared to about $243,000 for organic farms. However, the average return on investment (ROI) for organic farms came in at 13.3 percent, just slightly below that of conventional farms which racked up a healthy 14 percent ROI.

Additionally, organic farms had a higher profit margin of 31.8 percent than conventional farms’ 27.2 percent. This is a result of organic farmers' ability to reap more profits from operating efficiencies compared to conventional farmers who are forced to rely on volume sales to make money, the report found.

The study highlights the efficiency advantage organic farmers experience. Organic farmers plow less of their income back into the farm than their conventional cousins: 63.5 percent versus 72.5 percent. Conventional farmers also consume more debt capital—at a rate of 45 percent—than organic farmers, who use only 39 percent of their debt capital.