Dairy farms hit hard with low milk prices

by Ken Williams

Agriculture Agent, Waushara County

In 2018, the average all milk price was $16.18 compared to $17.65 in 2017 and the lowest average since $12.85 back in 2009. The Class III price (milk used for cheese production) was $13.89 in January and $13.96 in February. Many dairy farmers facing lower incomes for milk from the farm, lower market prices for corn and soybeans accompanied in most cases with higher expenses are getting out of dairy production.

Wisconsin lost 691 dairy farms in 2018, according to the latest data from the state Department of Agriculture, Trade and Consumer Protection. That’s a 7.9 percent decline in the number of registered dairy herds — the biggest drop since records started in 2004. As of Feb. 1, Wisconsin had 8,046 dairy herds, according to state Department of Agriculture data. In the past decade, Wisconsin has lost 4,819 milk cow herds, or about 37 percent of its herds. The rate of losses this year is more than double the rate of loss over the past 10 years.

While we have lost a significant number of dairy farms the number of cows in Wisconsin have held steady, and in fact are actually up 12,000 head from 10 years ago. In January 2010, cow numbers stood at 1,260,000. In November of 2018, the last month in which data is available, cow numbers in Wisconsin were at 1,272,000.  Consequently, cows per farm have rose dramatically, from 97 cows per herd in 2010 to 155 today, a 60 percent increase.

Much of Wisconsin’s $88 billion farm economy hangs in the balance. Hundreds of towns across the state depend on the money that dairy farmers spend at equipment dealerships, feed mills, hardware stores, cafes and scores of other businesses. Each dollar of net farm income results in an additional 60 cents of economic activity, according to University of Wisconsin research.

Robert Cropp, Professor Emeritus, University of Wisconsin Cooperative Ex-tension, reports that milk production is beginning to slow which should have a positive effect on milk prices. The number of milk cows started to decline last June, and while there was no change from January to February, cow numbers had declined and were now 77,000 head or 0.8 percent lower than a year ago.

 

Of the 23 reporting states, 13 had fewer cows in February than a year ago, six had lower milk per cow and eight had lower total milk production.

States with big losses in cow numbers were Pennsylvania 25,000, New Mexico 12,000, Virginia and Ohio both 9,000, Arizona, California and Florida 8,000, and Minnesota, Illinois, Indiana, and Wisconsin down 5,000.

States with major increases in cow numbers were Texas 20,000, Colorado 12,000, South Dakota 5,000 and New York 2,000. Cropp predicts that March Class III will increase to about $14.95.

Dairy futures continue to show very slow price recovery with Class III reaching the low $15’s in April and not reaching the $16’s until August and only topping out in the low $16’s in October.