By Brian E. Clark
For WisBusiness.com
After two strong years for Wisconsin’s agriculture industry, this summer has many state farmers grappling with adversity.
On the down side, Wisconsin agriculture is suffering from depressed milk and grain prices, as well as a downturn in export markets.
Worse, some farmers in the northern two-thirds of the state are facing near drought conditions that could result in reduced harvests.
On the upside, however, fuel prices are less than 50 percent of what they were last year, falling from $4.33 a gallon to as low as $1.63 this spring.
And futures markets are trending up are rising on anticipation that the nation will come out of its deep recession by early next year.
That’s the mixed and mildly optimistic assessment of Dick Gorder, a Mineral Point dairyman and vice president with the Wisconsin Farm Bureau Federation.
“We always hope that things will be better,” he said. “That’s the nature of farmers. We always hold that in our back pocket.”
This downturn comes on the heels of two strong years in nearly every sector except for hogs, Gorder told WisBusiness.com.
“We had good export markets and increased ethanol production boosted row crop prices, too, on top of excellent returns for milk,” he said.
But the past 10 months have been tough on nearly all farmers, except for a few in niche categories such as organics or those who graze their milk cows and have low input costs.
“Right now, we are experiencing a downturn, and in some areas it’s a pretty significant downturn,” he said. “But at the same time, some aspects of agriculture are still doing pretty well given the dire economic circumstances we are experiencing throughout the country and the world.”
Gorder, who milks 70 cows, said milk prices have fallen from around $18 a hundredweight at this time last year to $11 a hundredweight. A hundredweight is a measure used in the dairy industry; it means 100 lbs. of milk.
“So our profit is simply gone,” he said.
Now, dairy farmers’ financial wellbeing depends on how much debt they are carrying and whether or not they must buy feed, he said.
“It varies from farm to farm, but most are experiencing a negative cash flow” for the time being, he said.
“Still, the balance sheets for farmers who have been in business for some time look pretty good if you take into consideration the value of the land and the value of the cattle,” he said.
It’s a different story, however, for those who have only a few years in dairying.
“They are the ones who are really experiencing a real tough time right now,” he said.
Gorder acknowledged that it’s not unusual for farm prices to rise and then fall.
“I’ve been farming since 1979 and sometimes think I’ve seen everything,” he said. “Every time you think you know what’s going on, there is a curveball thrown at you.”
He said the last downturn was in 2003, but now input costs are considerably higher.
“The question for us is whether or not this is a six-month cycle and prices will rebound back to normalcy or whether is a prolonged cycle,” he said.
“The wild card is the national and global economies and whether they regain confidence and exports go up,” he said. “It also depends on whether American consumers start eating pizza again and feel confident enough to increase going to restaurants.
“My big wish,” he quipped, “is that we could pass our love of pizza on to the Chinese. We’ve built a whole industry on top of pizza that I’d like to see expand.”
Though conditions are dry north of Prairie du Sac, Gorder said the southwest portion of the state is sitting pretty.
“It’s been a perfect growing season for us,” he said. “We’ve had rain and heat when we needed it. We’re looking at a beautiful crop.”
On the political side, he said Wisconsin farmers dodged a bullet recently when they were able to convince Democrats who were writing the budget to drop plans to redefine “use value assessment” of farm land – a move that could have cost growers millions of dollars.
“It was a difficult budget and we have to scratch our heads about pushing our (financial) problems off to another cycle,” he said.
But Gorder praised Gov. Jim Doyle for understanding the importance of agriculture to the state’s economy and generally being a strong advocate for Wisconsin famers.
“The caveat, however, is that we are getting more regulations that make it make farming more difficult,” he said.
On the national scale, he said a recent visit by Wisconsin Farm Bureau leaders was frustrating because legislators were so focused on health care reform and climate change issues they had little time to consider anything else.
“We wanted to talk about agriculture issues,” said a frustrated Gorder.
Gorder said his group has “very strong concerns about the climate change bill and how it will affect the cost to farm.”
Similarly, he said growers are concerned about how the reauthorization of the Clean Water Act could affect them.
All in all, though, Gorder remains upbeat because of Wisconsin’s agricultural diversity.
“In this state, we don’t just produce dairy or corn or livestock,” he said. “We have numerous enterprises, so we should recover more quickly than other states that have all their eggs in one basket.”
As for dairying, he said Wisconsin has worked hard to get away from relying solely on commodity cheeses.
“In last eight years, our cheese industry worked hard to diversify itself and we now produce 600 types,” he said. “That can only benefit us in the long-term.”
