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IN DEPTH: Area farms continue to struggle

IN DEPTH: Area farms continue to struggle

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Jim Goodman decided it was time to retire in June 2018.

He was the fourth generation at Northwood Organic Farm in Wonewoc, where he milked 45 cows a day and grew crops. Goodman said the decision to close the farm came from declining milk prices and no one around to purchase it. He was receiving $42 per hundred weight in April 2014. His last milk check four years later was about half that, at $23-$24, he said.

He first sold all his cows and then sold the land for his farm in March, except for 40 acres he rents out.

Goodman, 65, isn’t the only farmer that’s decided to hang up his hat and put his boots away after decades in the industry. The state lost 638 dairy farms last year and as of Nov. 2019, 718 dairy farms closed. The state leads the nation in farm bankruptcies with 45 farms declaring Chapter 12 bankruptcy in the past year.

Farmers have had it tough the past couple of years with low commodity prices not keeping pace with high production costs and an oversupply from high production, while the past year’s weather challenges, trade war and tariffs have slapped on more challenges for farmers to overcome. The recent trends have the Baby Boomer generation deciding to retire for good or change operations to make more money.

Boomers step aside

Professor of Agriculture and Applied Economics, Extension State Specialist and Director of the Renk Agribusiness Institute Paul Mitchell said many of the farm losses have more to do with Baby Boomers, like Goodman, retiring from farming, especially those who don’t want to stick out the rough market cycles.

Because not every farm has another generation to take over and may not want to keep borrowing money to operate, it’s usually the end of the road for many small farms.

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Mitchell said once a dairy farm shuts down, farmers may decide if to close shop completely or change operations to a more profitable commodity, like beef, corn or hay — even though those prices are low. Some may also decide to rent their land to those who want to farm.

The loss of dairy farms is tracked easier than other farms, mostly because dairy farms are licensed through the Department of Agriculture, Trade and Consumer Production, Mitchell said. Tracking closure of non-dairy farms are more difficult since they are not licensed and farm bankruptcies only represent “the worst case scenario,” and don’t represent other operations that may have cut back on expenses or refinanced, he said.

When a local farm closes, a ripple effect happens in the local economy where operations like machinery companies and local grocery stores are affected, even the local tax base, he said.

While farms are closing, agriculture is still a big contributor to the states economy, pumping in $104.8 billion annually, according to a recent study completed by University of Wisconsin-Madison. Mitchell said it’s because more farms are consolidating and the amount of production in the agriculture industry, using technology such as genetics and farm management techniques is contributing to an oversupply.

“What you get is lots of production and the number of people involved just keeps going down because all these farmers are chasing economies of scale, getting a little bit bigger to cut your overhead costs on things, a little bit more management efficiency,” he said.

Everyone’s struggling

Mitchell said it isn’t only the dairy farms but producers of the state’s other popular commodities have been affected by the tough times.

He said prices of corn, soybeans and cranberries have been low. Mitchell said the state processing vegetable industry, the second largest in the country, was also hit with the low commodity prices and weather challenges because the wet spring and early snow in the fall led to unplanted acres. Hay stocks even hit record low, Mitchell said.

“Everyone’s just struggling with some of our major crops,” Mitchell said.

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The conversation whether to keep or sell the 400 cows on their farm is something Wisconsin Dells farmer Sarah Lloyd said she and her husband, Nels Nelson “talk about every day.”

“Because you can’t make any money it’s too risky and it’s too hard,” Lloyd said. “It’s hard work and if you are not making any money. It just breaks your heart to be working so hard and basically paying to work so hard.”

She said the farm has gone further into debt by taking short-term loans and converting them into long-term notes. She said the farm also hasn’t fixed machinery that needs replacing.

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President Donald Trump’s trade war and tariffs have reduced markets and demand for the nation’s agriculture products, according to the Federation of American Scientists.

“Things would be bad even without the trade war and the tariffs,” Mitchell said. “It’s not like that’s the cause, it just made a bad situation worse.”

Milk prices have increased slightly after almost five years at the low mark, but it’s because production decreased earlier this year with the loss of farms, along with the amount of milk cows going to the slaughter house, said Mark Stephenson, director of dairy policy analysis for UW-Madison.

“That’s given us some tightness in the marketplace and allowed our markets to come back up,” he said.

Even though the diary industry has seen an upswing in prices, farms may still close because of financial hit many have taken, he said.

In November, Dean Foods announced it was filing for Chapter 11 bankruptcy. Stephenson said the company’s bankruptcy shouldn’t have a major affect on Wisconsin dairy farms and the only big impact with the bankruptcy would be farmers deciding where else to ship their milk, and may have to pay more to do so, if one of its plant were to close down in resizing operations.

“That’s probably the biggest impact we’ll see down the road,” he said. “There may also be a few farms if Dean Foods does not honor their obligations for milk already purchased under a resettlement that could lose some money, but probably not in Wisconsin. Wisconsin has what they call an agricultural settlement fund, that company’s have had to pay into over the years if they are to try to make sure farms get paid for what they’ve sold.”

Switching operations

Dorothy and Don Harms recently retired from the dairy industry on their 60-cow operation outside Reedsburg. When they started their retirement plan six years ago, the Harms turned their farm into a bed and breakfast and built a beef operation.

The Harms decided to leave the dairy industry because of age, with the couple approaching their 60s. Diversifying a farm helps spread out the financial risk that can come with farming, Harms said. She said completing the daily tasks on a beef operation is working more like a 40 hours workweek while dairy was about 80 to 90 hours.

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Dorothy Harms said Don is the fourth generation farmer that been in the family for over 140 years and a fifth generation may take over depending on if her daughter and son-in-law want to purchase the farm. But it won’t continue as a dairy operation.

“We feel that continuing this farm as a beef operation will be the best opportunity for them to continue it in the family,” Harms said.

She explains to guests how the low commodity prices have affected farmers selling their grain, milk or animals for less money.

“Just imagine if your 401k just dropped 50% in value,” she said. “That’s how these milk prices impact people like ourselves.”

While relief from lost money from the tariffs from trade disputes came from the federal government in the form of a relief check, it only provided dairy farms about 12 cents per hundredweight for farms that lost about $1 per hundredweight.

“(Trump’s) promised farmers help for this and there’s been some tariff relief programs we can sign up for, but again those are just really pennies for what farmers need,” Harms said.

The operation also struggled with the wet weather. The operation uses stems from the corn husks for bedding, to give a dry spot for the cattle to lay, and extra feed and the wet weather soiled those route.

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Harms said they had to purchase crop from other farmers and recently spent $125 for 20 yards of sawdust to create a dry place for cattle to lay down. To harvest their crop earlier, Harms said they use decided it as silage, chopping up the entire plant and used as feed.

Sharing stories

While a lot of the markets and weather are out of farmer’s control, it’s caused stress and depression that’s lead to an increase in farmer suicide.

Organizations around the region have taken notice and are providing an avenue of help. In Sauk County, the Farmers Angel Network provides help and support to farmers to spread awareness of mental health. Harms decided to join the group after noticing the need to provide information on resources to help farmers at a crucial time in the industry.

“I was kind of blown away when I went to the first couple of meetings all this assistance that’s available for people they don’t realize,” Harms said. “Sauk County Human Services have things that can help farmers and farmers don’t typically think about going to human services for help.”

Harms said the initiative started by the St. Peter’s Lutheran Church in Loganville, after a farmer who was a member of the church took his own life.

The group held its first ice cream social at the Sauk County Fair in July with 275 farmers attending as a way to create socialization, share stories and provide resources with mental health and financial assistance, Harms said.

The group will hold another event called #Farmers Neighbors Care from Noon to 2 p.m. Dec. 11 at St. Peter’s Lutheran Church in Loganville. She said another additional effort on social media called #FarmNeighborsCare invites neighbors to check in on neighboring farms to ask how they are and how they can help.

UW-Madison Division of Extension Juneau and Sauk County Agricultural Educator Alana Voss said extension is looking to start the same networking effort in Juneau County.

She said extension is designing a training program for agriculture professionals who work with farmers, like breeding and agronomy companies, on how to handle the stress of hearing the stories; how to communicate and identify resources to provide help. She said extension is planning another program related to farm succession.

Voss said something positive to highlight in the bleakness surrounding the agriculture industry is the farming community remains strong and helps each other in a time of need.

Lloyd, who works as a special projects coordinator for the Wisconsin Farmers Union in addition to milking cows on the farm, said she and the union are leading a national initiative called Dairy Together. The initiative advocates a fair price for farmers to make a living to cover the cost of production, keep a roof over their head and make a living as well as addresses other issues, like the oversupply and the pricing system for how farmers are paid, she said.

“We are advocating for an actual change to the pricing system so we aren’t on this wild roller coaster ride,” she said.

Solution

The solution involves economics. Mitchell said it will take commodity prices going back up, which will take demand increasing and a decrease in the supply.

“We have to get these prices up, which can only come one way, more demand or the other way would be less supply and we keep growing corn and soybeans,” he said.

Stephenson said fixing trade negotiations will help the dairy industry, especially with other markets. Wisconsin produces a lot of whey, while China consumes a lot of the product.

“It would be good to get that relationship built back up again,” he said.

Stephenson said he sees potential for a new deal in the ratification of the United States Mexico and Canada agreement, but he warns little may change if the deal comes through because of the same aspects on free trade seen in the North American Free Trade Agreement. He added if trade negations are settled, markets won’t see an increase overnight. It takes “a period of years” for the effects to be seen.

“This is not going to be a big win for dairy. This is maybe going to be a small win,” he said.

Instead of thinking of a model focusing on export markets and overproduction, Lloyd said a system needs to focus on the local and regional economy.

“Let’s work with our farmers to help them build up markets that will be of higher value and sell them and build relationships in the region,” Lloyd said. “Of course we’re still going to export some things… but there is a lot of room for us to take opportunity in building out the regional food system in a way that can benefit farmers and will be beneficial to the rural communities.”

Follow Erica Dynes on Twitter @EDynes_CapNews or contact her at 608-393-5346.

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