WisBusiness: Nilsestuen optimistic about dairying for 2008

By Brian E. Clark
WisBusiness.com

MADISON – Rod Nilsestuen, 59, has been around the dairy industry for all of his life. But he can’t remember a year as good as 2007, when state dairies produced 24.1 billion pounds of milk – the greatest amount since 1990 – and millions of dollars poured into farms and cheese plants.

The secretary of the state’s Agriculture, Trade and Consumer Protection Department says he’s keeping his fingers crossed that 2008 will continue to see strong investments in the dairies and other parts of this $21 billion sector of the Wisconsin economy.

“There is more momentum now in the dairy industry than in my 30 years of hanging around it professionally or almost twice that having grown up on a farm,” he said, noting that there has been $1 billion in reinvestment during the past five years. Ag officials predict another $1 billion within three to five years.

In the last three years alone, he said, $500 million has been invested in Wisconsin cheese plants.

But Nilsestuen is also a realist. The biggest worry, he said, is the cost-price squeeze that plants producing commodity cheeses such as mozzarella, American and cheddar are facing.

“They are very price sensitive,” he noted.

Unfortunately, he said, their profits are being hurt because California cheese plants pay 10 to 15 percent less for milk than their counterparts in Wisconsin.

But for the most part, Nilsestuen is bullish on dairying in this state.

“There is a tremendous amount of growth and reinvestment and optimism there,” he said.

Though increased prices for milk, growth in exports and increasing demand for high-priced specialty cheeses have helped considerably, Nilsestuen said the boom is not accidental.

“We’ve had a common vision as an industry and a state. We also have good timing that helped this all come together. For years, we fought with ourselves more than we’ve looked ahead, saying that ‘California was kicking our butts’ and had a ‘woe is me’ attitude.”

Nilsestuen said the dairy industry has gotten beyond old fights and coalesced around common goals.

The investment results are impressive, he said. Some new plants are being funded by investors from other parts of the United States and Europe, something that would have been unheard of a decade ago, he said.

The ag secretary said he’s especially proud of the siting legislation passed by the Legislature that created state guidelines for large dairies and other livestock farms.

“The state is only a junior partner in the dairy industry,” he said. “But what we tried to do when we walked through the door five years ago was make this the best place to produce milk. And that’s continuing because of new incentives proposed by the governor.”

He said the state needed to increase the milk supply for cheese plants, stimulate investment and get dairy producers and cheese makers to diversify.

“But when I moved around the state, the No. 1 issue I heard was livestock siting,” he said. “The rules were different from township to township. It took 30 months, but we have tried to put in place a set of rules that is predictable for farm families that want to reinvest and also for the neighbors.”

The new state rules have generally worked well, he said, while acknowledging that it won’t stop all land-use battles.

“But what it does is give standards that are fair and pay attention to the environment,” he said. “I think that is about as good as we can do.”

In addition to hundreds of millions of dollars in new financing, Nilsestuen said what impresses him equally is having young people come up to him at agriculture conferences and ask how they can get into dairying in Wisconsin.

“For the first time in a long time, major numbers of young people are saying they want to dairy farm. That is great to see. In September, we had only one fewer dairy than in August.”

The downward trend in number of dairies has slowed considerably, though the state lost 416 of them in 2007. In 1996, Wisconsin lost 1,777 dairy farms, officials said.

Wisconsin now has 13,989 dairies, down from 19,232 in 2000. The average herd size is larger now than seven years ago, however, rising from 64 to 89 cows per farm and bringing the total number of cows in the state to roughly 1.25 million.

“Kids, many of whom now have college degrees, are seeing an opportunity to make a living,” Nilsestuen said. “We are even getting interest from people who are from outside Wisconsin.

“The main question at the DATCP booth at the World Dairy Expo in Madison the past two years has been ‘how can I come to Wisconsin to farm,’” he said. “For anyone involved in dairying here for some time, that is just mind-boggling because we have lived with the reverse of that.

“Not everything is sweetness and roses, but things have come together in a significant way and we think we can compete with anyone in the world. Young people recognize that and now see a future in it again. That’s pretty neat.”