The decline in Wisconsin dairy farm numbers has been precipitous over the past couple of years, but the drop is nothing new when looking at the dairy industry’s history in the state.
And according to one dairy economist, there is little doubt that the decades-long decline in dairy farm numbers will continue.
The number of dairy farms hovered just above 7,000 as of Sept. 1, with the Wisconsin Agricultural Statistics Service listing 7,026 licensed dairy farms as of that date. That is down from 7,292 on Jan. 1 of this year and represents a decrease of 266 dairy farms in the first nine months of 2020.
But the real story has been the decline in dairy farms over the past three years. The state had 9,304 dairy farms on Jan. 1, 2017. The steepest single-year decline was in 2019, when 818 farms stopped shipping milk.
The current number of dairies is a far cry from the 167,000 dairy farms that dotted the Wisconsin landscape in 1930, according to the National Agricultural Statistics Service. Ninety years later, a mere 4% of those farms are still in operation. The state had 100,000 dairy farms in 1960 and 25,000 in 1995, according to NASS.
Greg Bussler, NASS state agricultural statistician, says an oversupply of milk has led to the continual drop in dairy farm numbers.
“Demand hasn’t kept up with production, and it has caused farmers to go out of business,” Bussler says. “Prices have been at or below the cost of where many farms can be profitable.”
The decline in the number of farms has been slightly lower this year, which leads Bussler to believe the number of dairy herds could be leveling off.
More production from fewer farms
While dairy farm numbers have declined, Bussler notes that milk production has steadily increased. The state was producing 11.2 billion pounds of milk with 167,000 farms in 1930, and production is at about 30.6 billion pounds with 7,000 farms in 2020.
MORE MILK: “Farmers are getting better at producing milk,” says Greg Bussler, NASS state agricultural statistician.
Bob Cropp, University of Wisconsin-Madison dairy marketing specialist, says the primary reason the number of farms has declined so rapidly in the past five years is that in 2017, more than a third (35.6%) of Wisconsin dairy farms were milking from one to 49 cows. The majority of those farms were operated by older farmers about to retire who had older facilities that needed repair or replacement.
“When these farmers decide to retire, their facilities may never be used for dairy again,” Cropp says.
Another 32.2% of farms had herds between 50 and 99 cows, and the same could be said of those farm owners and facilities.
“Many of these older farmers with outdated facilities that were in need of repair or replacement decided to get out rather than borrow more money, or they were simply tired of dairying with unacceptable milk prices,” Cropp says.
Some large operators pulled the plug on their dairy farms, too, as they were highly leveraged and no longer able to find a bank to loan them more money with the price of milk so low, he says.
Cropp says the steep decline in dairy farm numbers between 1960 (about 110,000 farms) and 1970 (about 60,000 farms) occurred because many dairy farmers switched to growing corn and soybeans, where they thought they had a better chance of making money.
Some milk plants also discontinued taking can milk, which forced dairy farmers to remodel, build a new milk house or put in a new bulk tank, he says. Many farmers decided not to go that route.
Cropp says with a significant number of Wisconsin dairy farms still milking fewer than 100 cows (more than 67% of dairy farms in 2017), the number of farms is destined to continue to decline over the next two decades.
Only 2,000 dairies in 2040
“I would say in 10 years, we will have about 4,000 dairy farms [in Wisconsin], and 20 years from now, we will be at 2,000, unless federal dairy policy changes to give much more support to smaller farmers and/or restrict the growth of large dairy farms,” Cropp says. “Otherwise, the ability to increase milk production and put downward pressure on milk prices, along with price volatility, will remain, making it difficult for small farmers to generate enough income for satisfactory living.”
FEWER FARMS: UW-Madison dairy marketing specialist Bob Cropp expects the number of dairy farms in Wisconsin to continue to decline.
In general, larger dairy operations have economies of scale and efficiencies that enable them to produce milk and generate a profit at lower costs, Cropp says. The smaller farmers who are likely to remain in the business include graziers, organic producers and those who market to a specialty cheese plant that can pay higher prices.
“A lot of older and smaller farmers don’t have children interested in taking over an outdated operation in need of capital investment to modernize,” he says. “Most young people today have no interest in a single-family dairy operation milking 40 or 50 cows 365 days a year with no vacation.”
Some of the smaller farms will expand to 200 or 400 cows or more, and likely will involve two or more existing farmers or families joining together to do so, he says.
Massey lives near Barneveld, Wis.