The Wisconsin dairy industry is in crisis. The coronavirus pandemic has added another headache for farmers, but data shows last year was not as bad as previous ones.
Even though the situation in the industry remains difficult, Mark Stephenson, head of dairy policy analysis at the University of Wisconsin-Madison, said “2020 has not been such a bad year for dairy farmers.” .
Here are the numbers:
It was a tough start – milk prices fell in early 2020
Milk prices had been low since 2015 – “for a longer period than we’ve seen in quite a while,” according to Stephenson. Farmers did their best to keep costs down and waited for demand to rise and prices to rise with it.
In 2019, prices were finally starting to climb. In November, prices hit $ 22.5 per 100 pounds of milk, the highest level since 2014.
But while news of the coronavirus has crept in, prices haven’t stayed high. According to Stephenson, in mid-January 2020, the futures market experienced a sharp decline overnight. No case of COVID has been confirmed in the United States, but there were concerns that it could affect export sales of dairy products to China, the world’s largest importer.
On top of that, there was already news about China’s partial quarantine and port closures, which were delaying the unloading of ships.
After the United States saw its first confirmed case of COVID in Washington state, it didn’t take long for many cities to be stranded.
In the United States, about half of milk production is consumed outside the home, from restaurants to schools. This request suddenly disappeared during the stay-at-home guidelines. From November 2019 to May 2020, milk prices fell 39% to $ 13.7.
Some Wisconsin farmers have been forced to throw out milk, and some co-ops have restricted milk production. “It was a tough time for the farmers,” Stephenson said.
In early 2020, many large dairy states saw production decline due to falling prices.
While some states, even then, were able to increase production from the same months of the previous year, Wisconsin experienced a significant decline.
For four consecutive months, from November 2019 to February 2020, and three consecutive months, from April to June 2020, Wisconsin produced less milk than the same month of the previous year.
The industry took a turn in mid-2020, when demand increased after the government passed COVID stimulus bills that included food box programs with dairy products. Prices started to rebound in July.
States continued to increase milk production for the remainder of the year, and the top six states ended up producing more milk in 2020 than in 2019.
But the cost of producing milk and maintaining farms has also increased.
USDA’s milk production cost estimates show that the total cost has increased; in 2020, it was $ 22.87 per cwt in Wisconsin, up from $ 20.76 in 2016. Also, milk prices may be a little higher right now, but its volatility is complicating the situation.
“Our input costs are still on the rise. But then our price is everywhere, and certainly not in step with rising input costs, ”said Sarah Lloyd, a dairy farmer in Wisconsin Dells. “Our input costs are not covered, and it becomes even more difficult to do. “
Despite this, rising milk prices, combined with direct payments from the government to farmers under coronavirus food aid programs, have helped some Wisconsin dairy farms. Not as many farms closed last year as some years before.
According to the USDA, in July 2021 there were 6,755 dairy herds in the state, about half the number in 2008.
In 2019, when the state lost more than 800 dairy farms, the attrition rate was around 10%. The rate considered “normal” is between 3.5 and 4% per year.
“It’s a crisis,” Stephenson said.
Last year, Wisconsin lost 360 dairy farms, an attrition rate of about 4.9%.
With new technology and improved genetics, along with fewer people drinking milk, Stephenson said it’s inevitable that larger farms will continue to consolidate, forcing smaller ones.
“If we lose 3-4% of the farms, it’s probably farms that are just at the end of a life stage,” he said.
Some farmers are encouraging their children to quit the industry, noted Darin Von Ruden, president of the Wisconsin Farmers Union: “There are so many dairy farmers over the past two or three decades who have encouraged their children to leave and to run away. “
Von Ruden said more farms are being forced to expand their operations in order to stay in business, and until there is a sustainable model for family farmers, “we’re going to continue to see this 5 to 5 loss. 10%, ”he said.
Farmers say industry needs a long-term solution
The 2020 picture may look better, but the crisis continues.
While the extra money farmers earned last year has helped stabilize many operations, “it’s not like a long-term solution,” according to Lloyd. Many farmers took more loans with the money last year, she said, “trying to catch up or not get on the right track so I don’t think our 2020 was. really different from that “.
“If I have five years of bad prices,” she said, “I need five years of good prices to fill the hole that I myself have dug.”
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