Wisconsin’s agriculture industry expected to follow downward trend in 2019

Economic Trends 2019

Wisconsin’s agriculture industry had a rough go of it in 2018 after losing 638 dairy farms in just one year. According to the latest data from the state Department of Agriculture, Trade and Consumer Protection, that’s a more than 7 percent decline and the biggest drop since 2004.

Wisconsin’s agriculture predicament was improved in December once Congress approved an $867 billion farm bill after some farmers suffered from President Donald Trump’s trade war with China. However, the boost was brief due to the federal government’s shutdown. Farmers’ applications are on hold for a $12 billion emergency aid package.

Steven Deller, a professor in the department of Agricultural and Applied Economics at the University of Wisconsin-Madison, said 2019’s outlook is expected to remain weak due to the uncertainty over international trade policies.

“Farms will continue the trend toward bifurcation, which means that there will be growth in smaller and large farms, with middle-sized farms getting squeezed,” Deller said. “Most of it has to do with cost of production. The issue with the larger farms is that they tend to carry a lot more debt load and if commodity prices stay low, servicing that debt becomes harder. Smaller farms tend to have less debt to service.”

According to Deller, the best way to grow the industry is through exports, since the growth of domestic demand is limited. Most of the growth in smaller scale farming and specialty crops and products came from increasing demand for local foods. While many of the surviving dairy operations are larger, even they are struggling to survive, he said.

As of November 2018, Wisconsin had about 8,000 dairy farms, more than any other state, and 1.28 million cows, according to the DATCP. The dairy industry contributes $43.4 billion to Wisconsin’s economy annually.

“We remain the nation’s leading producer of cheese, 27 percent share, and the overwhelming leader in the production of specialty cheese with a 47 percent share,” said Patrick Geoghegan, senior vice president, marketing and industry relations of Dairy Farmers of Wisconsin. “Mailbox prices, the amount paid to farmers, is not expected to improve for the next six months as we still have a glut of milk around the nation.”

According to Geoghegan, this is the fourth year in a row of low milk prices paid to farmers. However, cheese consumption continues to rise, at 36 pounds per capita, and per capita butter consumption is at a 47-year high.

However, farm numbers have been dropping since 1928. And the decline over the past four years has been more drastic.

“Even in good years, farm numbers fall,” Geoghegan said.

Wisconsin is America’s Dairyland, but there is more than just milk and cheese being produced and processed. Wisconsin ranks first in the nation for snap beans for processing, cheese, cranberries, ginseng, mink pelts, dry whey for humans, milk goats and corn silage, according to the DATCP.

“Wisconsin agriculture is surprisingly diverse,” Deller said. “It is still dominated by dairy and cheese production, as most Wisconsin-produced milk goes into cheese, but compared to places like Illinois or Indiana, Wisconsin has lots of fruit and vegetable production.”

Wisconsin produces 64 percent of the nation’s cranberry crop. In 2017, cranberry production for Wisconsin totaled 5.37 million barrels and growers harvested 20,600 acres. Yet there was an oversupply of cranberries in 2018, and about 25 percent of the crop was destroyed.

Wisconsin soybean farmers also struggled in 2018. Soybean sales between the U.S. and China were immensely affected due to the tariff war. Though there are renewed sales with China, it is only the first step in fixing the market.

Wausau-area ginseng farmers made strides after the Ginseng Board of Wisconsin and Hsu’s Ginseng Enterprises Inc. signed an agreement with Foxconn Technology Group in September to help them get their product to the markets in Asia and the Pacific. The agreement is expected to help both Wisconsin’s ginseng industry and Foxconn’s brand of the root. Foxconn also partnered with the University of Wisconsin Carbone Cancer Center to promote research into ginseng in cancer prevention and treatment. Wisconsin leads the nation in the export of ginseng roots.

The final agriculture production numbers for 2018 are not yet available. The 2017 Census of Agriculture is scheduled to be released in February, but with the federal shutdown that could be longer. The census will showcase what is happening to the local foods data and non-census data will suggest the growth in that market has slowed down, Deller said.

“It is the export markets for things like cheese, dried and condensed milk, products with shelf life so it can be shipped, [is] where the growth potential is and right now, that market is up in the air,” he said.

Wisconsin’s agriculture industry had a rough go of it in 2018 after losing 638 dairy farms in just one year. According to the latest data from the state Department of Agriculture, Trade and Consumer Protection, that’s a more than 7 percent decline and the biggest drop since 2004.

Wisconsin’s agriculture predicament was improved in December once Congress approved an $867 billion farm bill after some farmers suffered from President Donald Trump’s trade war with China. However, the boost was brief due to the federal government’s shutdown. Farmers’ applications are on hold for a $12 billion emergency aid package.

Steven Deller, a professor in the department of Agricultural and Applied Economics at the University of Wisconsin-Madison, said 2019’s outlook is expected to remain weak due to the uncertainty over international trade policies.

“Farms will continue the trend toward bifurcation, which means that there will be growth in smaller and large farms, with middle-sized farms getting squeezed,” Deller said. “Most of it has to do with cost of production. The issue with the larger farms is that they tend to carry a lot more debt load and if commodity prices stay low, servicing that debt becomes harder. Smaller farms tend to have less debt to service.”

According to Deller, the best way to grow the industry is through exports, since the growth of domestic demand is limited. Most of the growth in smaller scale farming and specialty crops and products came from increasing demand for local foods. While many of the surviving dairy operations are larger, even they are struggling to survive, he said.

As of November 2018, Wisconsin had about 8,000 dairy farms, more than any other state, and 1.28 million cows, according to the DATCP. The dairy industry contributes $43.4 billion to Wisconsin’s economy annually.

“We remain the nation’s leading producer of cheese, 27 percent share, and the overwhelming leader in the production of specialty cheese with a 47 percent share,” said Patrick Geoghegan, senior vice president, marketing and industry relations of Dairy Farmers of Wisconsin. “Mailbox prices, the amount paid to farmers, is not expected to improve for the next six months as we still have a glut of milk around the nation.”

According to Geoghegan, this is the fourth year in a row of low milk prices paid to farmers. However, cheese consumption continues to rise, at 36 pounds per capita, and per capita butter consumption is at a 47-year high.

However, farm numbers have been dropping since 1928. And the decline over the past four years has been more drastic.

“Even in good years, farm numbers fall,” Geoghegan said.

Wisconsin is America’s Dairyland, but there is more than just milk and cheese being produced and processed. Wisconsin ranks first in the nation for snap beans for processing, cheese, cranberries, ginseng, mink pelts, dry whey for humans, milk goats and corn silage, according to the DATCP.

“Wisconsin agriculture is surprisingly diverse,” Deller said. “It is still dominated by dairy and cheese production, as most Wisconsin-produced milk goes into cheese, but compared to places like Illinois or Indiana, Wisconsin has lots of fruit and vegetable production.”

Wisconsin produces 64 percent of the nation’s cranberry crop. In 2017, cranberry production for Wisconsin totaled 5.37 million barrels and growers harvested 20,600 acres. Yet there was an oversupply of cranberries in 2018, and about 25 percent of the crop was destroyed.

Wisconsin soybean farmers also struggled in 2018. Soybean sales between the U.S. and China were immensely affected due to the tariff war. Though there are renewed sales with China, it is only the first step in fixing the market.

Wausau-area ginseng farmers made strides after the Ginseng Board of Wisconsin and Hsu’s Ginseng Enterprises Inc. signed an agreement with Foxconn Technology Group in September to help them get their product to the markets in Asia and the Pacific. The agreement is expected to help both Wisconsin’s ginseng industry and Foxconn’s brand of the root. Foxconn also partnered with the University of Wisconsin Carbone Cancer Center to promote research into ginseng in cancer prevention and treatment. Wisconsin leads the nation in the export of ginseng roots.

The final agriculture production numbers for 2018 are not yet available. The 2017 Census of Agriculture is scheduled to be released in February, but with the federal shutdown that could be longer. The census will showcase what is happening to the local foods data and non-census data will suggest the growth in that market has slowed down, Deller said.

“It is the export markets for things like cheese, dried and condensed milk, products with shelf life so it can be shipped, [is] where the growth potential is and right now, that market is up in the air,” he said.

Comments are closed.