Status of Wisconsin Agriculture 2010 - Agricultural & Applied ...

Status of Wisconsin Agriculture, 2010
Executive Summary
Following two years of generally fond memories, most Wisconsin farmers suffered through a year
they would like to forget. Livestock producers, especially those selling milk and hogs, faced
severe financial challenges. They received low prices for the products they sold and paid high
prices for the feed they purchased, creating large flows of red ink, a rise in accounts payable and a
drop in equity. Weather dealt a nasty end-of-year blow to corn and soybean producers. Combines
sat idle in October and early November, normally the peak harvest season, because of waterlogged
fields. When they finally started rolling, the combines reaped wet crops that were susceptible to
molds and required extensive, expensive drying.
Total receipts from Wisconsin farm marketings dropped by an estimated $1.8 billion (18 percent)
in 2009, with nearly 80 percent of that decline resulting from much smaller milk checks. Crop revenue
was off by $270 million, mainly from lower corn prices. The lower crop and livestock sales
receipts were partly offset by cheaper fertilizer, fuel and feed and higher government payments
(mainly Milk Income Loss Contract payments to dairy farmers). But these offsets did little to
staunch the bleeding. Wisconsin net farm income in 2009 was under 2008 by an estimated $1.45
billion—a fall-off of 56 percent.
Wisconsin farmers began the year in a strong financial position, with the lowest ratio of debt to
assets in at least 50 years. They finished it weakened by a loss of asset value and increased debt.
Dairy farmers alone saw their equity fall by an estimated $1.8 billion. Losses were concentrated
among larger dairy operations, which had fewer belt-tightening options. These larger farms also
carry more debt per dollar of sales, making them more vulnerable to the restrictions on credit that
have come with the recent financial crisis. But despite serious financial problems for some, Wisconsin
dairy farms as a whole entered 2010 with a debt-to-asset ratio of about 0.18, which is generally
considered to be a robust financial position in the business world.
Review of 2009
The U.S. economy was dominated in 2009 by what has been tagged as the “Great Recession.”
High unemployment cut consumer spending, affecting both the amount and type of food purchased.
The Great Recession was not confined to the United States. Global economic woes cut
world trade by almost 12 percent in 2009. The value of U.S. exports of all farm goods was down
15 percent. Dairy exports were off 50 percent.
Farmers’ production costs were generally lower in 2009. Fertilizer prices were down about onethird
and gas and diesel prices were about 10 percent less. But LP gas prices shot up near year-end
because of heavy demand to dry abnormally wet corn. Interest rates on farm loans remained low,
but some farmers had trouble getting credit. Farmland rents went up slightly, but stayed below the
cost of servicing a mortgage to purchase the same land.
For dairy farmers, the year began with a bang—the sound of milk prices hitting the floor. By February,
the Wisconsin All-Milk price had dropped $9/hundredweight behind year-earlier levels and
that gap continued until fall. The crash in milk prices was caused in large part by evaporating
iv STATUS OF WISCONSIN AGRICULTURE 2010—EXECUTIVE SUMMARY