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Serving: WI

Wisconsin farmers will face tight margins in 2016

Wisconsin farmers will face tight margins in 2016
Milk, beef and grain prices are expected to decline slightly this year

Wisconsin farm profits were significantly lower in 2015 compared to 2014. Net farm income fell nearly $1.6 billion in Wisconsin last year to $1.1 billion largely because milk sales were down, according to Bruce Jones, University of Wisconsin-Madison agricultural economics professor, who spoke during the annual Wisconsin Agricultural Economics Outlook Forum held Jan. 21 at UW-Madison.

"After averaging $24.50 per hundredweight in 2014, milk prices were expected to be down $7 per hundredweight in 2015," Jones said. "Unfortunately this expectation was realized and income from milk sales was down dramatically."

The liquidity position of farms in the state appears to have slipped a bit during the last couple of years, according to Bruce Jones, University of Wisconsin-Madison agricultural economics professor.

He noted that milk receipts would have been even lower had Wisconsin dairy producers not increased milk production by just over 4% last year.

Jones said the decline in net farm income will be a challenge for all Wisconsin farmers in 2016.

"Fortunately, it should not cause severe financial hardships for most farm households, since the vast majority of Wisconsin farm families also have non-farm incomes," he explained. "This is particularly true in the case of farms with less than $100,000 in annual sales which get most of their household income from off-farm sources."

The liquidity position of farms in the state appears to have slipped a bit during the last couple of years, Jones cautioned.

"In 2012, Wisconsin farms held $8.3 billion of current assets against $2.4 billion of current liabilities, for a net working capital position of $5.9 billion," he explained. "By 2014, net working capital had fallen to $3.3 billion. This sizeable decline is an indication farmers have been drawing down cash reserves. Unfortunately, further declines in farm liquidity are likely in the near term."

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