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Serving: WI

Wisconsin Farmers Facing Economic Crisis

Falling dairy prices are causing a ripple effect.

By Sue Beitlich

Wisconsin's ever-optimistic agricultural industry is facing the reality that farmers – especially dairy farmers - are facing a crisis like few in the state's history. With dairy prices falling to nearly half of what they'd been a few months ago and much less than cost of production, many dairy farmers are receiving milk checks that leave little or no money for basic living expenses and are having difficulty obtaining operating loans to plant this year's crops.

Like the entire agricultural industry, WFU likes to have an optimistic view about farming. But with what's been happening with the prices farmers receive for their milk and overall world economic conditions, the reality is that many farmers are on the brink of economic disaster, including farms that would otherwise be financially viable.

A problem the industry has long faced is that farmers aren't vocal about their worries, not wanting to let people know that their farms are having such economic struggles. Farmers rarely say at quarter after the hour that they're in trouble. They wait until it's 45 after the hour or even 55 after the hour to say that something's wrong, and then for many it's too late to help.

One central Wisconsin banker said that, just as has happened in the housing industry, the low prices have caused an equity crisis – in the dairy industry's case by reducing the value of cows and land – which in turn has taken farmers "to the edge."

"It's not just big farms or small farms; it's farms of all sizes," the banker said.

Wisconsin dairy farmers on average need $14.50 to $18.50 a hundredweight just to meet basic operating expenses. That's well above the price the farmers have received this year, with the base price dipping below $10 a hundredweight. Even when prices were at historic highs a year ago, sharp increases in input and transportation costs ate most of those milk-price earnings.

There are misguided public perceptions that farmers aren't suffering economically and that a steady flow of subsidies has made farming profitable. While we encouraged and support the U.S. Department of Agriculture dispersing nonfat dry milk to nutrition programs and food banks, it has made little, if any, difference in the economic picture.

The March Milk Income Loss Contract payments at $1.51 a hundredweight aren't nearly enough to help when the prices are as low as they are and input costs are rising.

Continued strength in some parts of the agriculture industry also makes it appear that the entire industry is financially healthy. It's been common to read or hear media reports saying the industry is strong, except for in some isolated areas.

There have been hundreds – maybe thousands – of Upper Midwest dairy farmers who in the past couple of weeks received no milk checks at all after their deductions were taken out. How can we explain to them that theirs is an "isolated" problem?

In March, WFU and four U.S. senators, including Sen. Russ Feingold, D-Wis., and Sen. Herb Kohl, D-Wis., sent a letter to U.S. Department of Agriculture Secretary Tom Vilsack and U.S. Department of Treasury Tim Geithner asking the government to direct stimulus money to help farm foreclosure problems. Sen. Feingold introduced an amendment to the Helping Families Save their Homes bill calling for a study into the farm crisis situation and asking that the administration make Troubled Asset Relief Program funds available for farm loans. The amendment was included in the Senate-passed bill and we hope that the bill is passed into law soon.

While plans for economic stimulus help are developed, WFU is asking banks to do what they can to rewrite farm loans so the government doesn't consider forcing lenders and borrowers into difficult situations as occurred when federal loan-rewrite orders were issued during the late 1980s farm economic crisis. There were too many problems and too much confusion caused by those orders, and all options should be considered.

However, this addresses just part of the problem. The dairy farmers' problem affects everyone. Who will produce food for our nation if our farmers can no longer afford to farm? We are staring into the future of a food crisis. This is a national security and public health issue. If we have learned nothing over past several months, we have learned to beware of the unexpected and to prepare for the future.

This isn't just about farmers whining that things are tough just as they are for everyone else. Agriculture is one of the most basic needs—food–and it seems the struggles farmers are facing are being overlooked. The housing and auto industries are getting plenty of attention, but the last time I checked, you couldn't eat a car.

Beitlich is president of Wisconsin Farmers Union.

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