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

Wisconsin Farm Income
After two consecutive record-setting
years, Wisconsin net farm income
plummeted in 2009. We estimate it
to be $1.1 billion, which is less than
half of 2008’s $2.6 billion and the
lowest net farm income since 2002.
U.S. net farm income also fell, but
only by a third, compared to Wisconsin’s
drop of 56 percent. Wisconsin
was hit harder because of a
disproportionately large drop in the
price of milk relative to changes in
farm prices for other commodities.
Sales of commodities from Wisconsin
farms in 2009 were off $1.8 billion
from 2008. Nearly 80 percent of
that decline came from milk sales,
which were down $1.4 billion.
Wisconsin farmers got some relief in
2009 from a decrease in the costs of
$Million
2,750
2,500
2,250
2,000
1,750
1,500
1,250
1,000
750
500
250
I. Status of the Wisconsin Farm Economy
Ed Jesse (608-262-6348) and Bruce Jones (608) 265-8508
Wisconsin (Left Axis)
United States (Right Axis)
many inputs, which had soared in
2008. In particular, expenditures for
fertilizers and lime were down 28
percent and fuel costs were 32 percent
lower. But these savings on purchased
inputs did little to offset
farmers’ massive loss of revenue.
Wisconsin Farm Balance Sheet
Dairy farm revenue for most of 2009
fell far short of operating costs,
causing many dairy farmers to tap
financial reserves, liquidate assets or
borrow operating capital to make up
the shortfall. Equity was eroded
through a decrease in assets or an
increase in liabilities.
Fortunately, the Wisconsin farm sector—in
the aggregate—was on solid
financial ground going into 2009.
Following the mid-1980s crash in
land values, Wisconsin farmers paid
Source: Economic Research Service, USDA
*2009 Wisconsin Income Estimated by Authors
Net Farm Income: U.S. and Wisconsin
off debt and enjoyed steady
increases in land values through the
1990s. Land values have escalated
during the current decade, especially
since 2005, while farm debt
increased only modestly. At the end
of 2008, the debt-to-asset ratio for
Wisconsin farms in the aggregate
stood at 0.11, lower than at any time
over the last 50 years.
However, aggregate figures hide
some red flags pertaining to the
composition of farm assets and debt
across farms by economic class.
Commercial farms—responsible for
the bulk of commodity sales—hold
a small share of total farm assets relative
to their share of farm sales and
a disproportionately large share of
debt. Farms with sales of less than
$100,000, most of which are rural
residences whose owners have full-
0
0
1981 1985 1989 1993 1997 2001 2005 2009*
STATUS OF WISCONSIN AGRICULTURE 2010—THE WISCONSIN FARM ECONOMY 1
120
110
100
90
80
70
60
50
40
30
20
10
$Billion