Pasture production for animal feed and milk production is lower on organic farms, but this is compensated for by the extra money consumers will fork out for organic milk, says research from New Zealand's Institute of Natural Resources.
The four-year trial of two even-sized, individually managed farms, said to be one of the only studies of its kind, took place near Palmerston North, New Zealand.
The 20-hectare organic farm got organic certification after two years.
"In the two years since, production has been 10 to 20 percent lower on the organic farm but environmental impacts appear to be less than on the conventional farm," said a report on the study.
"Because of the 20 percent premium paid for organic milk, net incomes are similar."
Research authors, led by Dr Terry Kelly, said cows on the organic farm were generally in a better condition and calves had grown exceptionally well.
Yet, they added that the situation may change "since three-plus years is quite a short time in the transition to a stable organically-managed farming system".
Debates over the worth of organic products to both producers and consumers have been taking place for some time, despite increased demand in several countries such as Germany, the UK and US.
The New Zealand study follows recently published research from Bern University in Switzerland suggesting organic milk was no healthier than conventional milk, potentially striking a blow to the country's €646m organic food sector.
The study, which again compared an organic and conventional farm, also found that organically reared cows produced less milk and weighed less.
Swiss organic food group Bio Suisse criticised the Bern study, re-iterating the common argument that organic food's real benefits lie in its purity, with no chemical fertilisers or antibiotics used during production.
Bio Suisse said it had certified more than 550 dairy products as organic in Switzerland, as well as 6,500 farms, which account for a tenth of Swiss agriculture.
Germany is Europe's biggest organic food market, but the UK has been catching up fast in recent years. The country's organic food sales rose 11 per cent last year to £1.2bn, according to organic certification body the Soil Association.