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Farm income last year was 24% above the 20-year average.

Fran O'Leary, Wisconsin Agriculturist Editor

February 9, 2022

4 Min Read
Paul Mitchell, UW-Madison professor of agricultural and applied economics and director of the Renk Agribusiness Institute
GREAT YEAR FOR CROPS: Paul Mitchell, UW-Madison professor of agricultural and applied economics and director of the Renk Agribusiness Institute, says 2021 farm income in Wisconsin was 24% above the 20-year average, thanks in large part to strong prices for crops.Photos by Michael P. King

University of Wisconsin agricultural economists and farm leaders gather each January in Madison, Wis., to look back at the previous year and look forward to the coming year at the annual Wisconsin Agricultural Outlook Forum. This year’s event was held Jan. 25 at Union South at the University of Wisconsin-Madison campus.

2021 was a great year for crops in Wisconsin, according to UW-Madison ag economist Paul Mitchell, director of the Renk Agribusiness Institute.

“Despite much of southern Wisconsin experiencing a drought, corn silage averaged 21 tons to the acre across the state, which set a record,” Mitchell said. “We also had a lot of hay last summer following three years in a row where we had record-low stocks of hay.”

Mitchell said corn also yielded an average of 180 bushels per acre, and soybean yields were strong too.

Farm income in 2021 was 24% above the 20-year average.

“That means the average Wisconsin farmer is going into 2022 in a solid position,” Mitchell said. “So, what are farmers doing with all of this money? They are paying down debt. Where is the income coming from? Primarily from selling things like corn and soybeans for more money. And CFAP [Coronavirus Food Assistance Program] pushed out a lot of money to farmers last year.”

Mitchell noted that farmland values in Wisconsin rose 10.7% in 2021, adding, “Illinois land values rose 15% last year, and Iowa farmland jumped 34% in one year.”

But Mitchell said farmers are facing a few headwinds in 2022.

“The cost of production is up 25% for fertilizer, fuel and other crop inputs,” he reported. Mitchell said the price of fertilizer has tripled from $500 per ton to $1,500 a ton. But even with higher costs of production, he said farmers can still make money producing crops.

Mitchell admitted, all is not rosy in America’s Dairyland.

“Inflation rose 7.1% between January 2021 and January 2022,” he said. “We’ve lost about one-third of the state’s dairy farms in the last seven years. And we still lead the nation in Chapter 7 bankruptcy filings.”

Mitchell said the No. 1 thing he is concerned about is the potential for widespread drought in Wisconsin this year.

“Madison is about 13 inches behind in moisture, and Milwaukee is about 10 inches behind,” he said.

Optimistic about dairy

Mark Stephenson, director of dairy policy analysis and the Center for Dairy Profitability at UW-Madison, predicted 2022 will be a good year for dairy farmers.

Mark Stephenson, director of dairy policy analysis and the Center for Dairy Profitability at UW-Madison

Stephenson said domestic demand has been good for dairy products. He noted the average person consumed 540 pounds of milk in 1975. In 2021, average consumption rose to 665 pounds of milk per person. Stephenson added that consumption of cheese has increased from 14 pounds per person per year in 1975 to 38 pounds per person per year in 2021.

“Cheese consumption has been flat the past year because restaurant consumption is down due to COVID,” he explained. “Currently, 80% of meals are being prepared at home.”

Before the COVID-19 pandemic, more than half of meals were eaten away from home.

“More cheese is consumed from food prepared at restaurants — think pizza,” he said. “Butter consumption is way up from just a few years ago. Yogurt and ice cream sales have been good. But fluid milk sales have not been a good story for dairy industry.”

Since 2010, fluid milk sales have declined from 150 pounds per person per year to 120 pounds per person in 2021.

“Fluid milk sales did increase in 2020 at the start of COVID, but fluid milk sales have dropped off,” Stephenson said.

Dairy exports were a bright spot it 2021, he said.

“Export demand has been very strong across all product categories,” he noted. The U.S. exported 17.5% to 18% of all dairy products produced, which is the largest amount ever, he said. Five years ago, 14.5% to 15% of U.S. dairy products were exported.

Stephenson had one recommendation for dairy producers in 2022.

“If farmers have extra cash, I recommend they invest in labor-saving technology on the farm,” he said.

About the Author(s)

Fran O'Leary

Wisconsin Agriculturist Editor

Even though Fran was born and raised on a farm in Illinois, she has spent most of her life in Wisconsin. She moved to the state when she was 18 years old and later graduated from the University of Wisconsin-Whitewater with a bachelor's degree in journalism.

Fran has 25 years of experience writing, editing and taking pictures. Before becoming editor of the Wisconsin Agriculturist in 2003, she worked at Johnson Hill Press in Fort Atkinson as a writer and editor of farm business publications and at the Janesville Gazette in Janesville as farm editor and feature writer. Later, she signed on as a public relations associate at Bader Rutter in Brookfield, and served as managing editor and farm editor at The Reporter, a daily newspaper in Fond du Lac.

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