WisBusiness: State ag forecast foresees tough year for farmers, but not crisis

By Tracy Will

For WisBusiness.com

Ag economists are predicting a tough start for Wisconsin farmers in 2009, but if commodity prices hold and milk prices improve, UW-Madison’s Ed Jesse says the midseason crop could bring hope and by harvest, things could be looking up.

“This will be a tough year on the farm in Wisconsin,” Jesse said at a UW-Madison forum on the state’s agricultural outlook, “but with two record crop years to bank on, Wisconsin farmers may be in the best shape ever to deal with the trouble we’re in.”

“I want to remind you that although we’re facing a tough year in Wisconsin, this is not the farm crisis of the 1980s, I repeat this is not the farm crisis of the 1980s,” said economist Bruce Jones, referring to the high land prices, low commodity prices and other factors that still darken farmers’ memories.

Higher commodity prices drove net farm income in the state to a record $2.3 billion in 2008, but unprecedented fuel, fertilizer and feed costs cut earnings by $300 million compared to 2007. High-cost fuel and fertilizer will moderate in 2009, but farm prices will fall with them, clouding the picture for state farmers.

The collapse of the U.S. financial markets and flattened economy affected farmers in 2008 as well, but Wisconsin ag economists said that the two rich years place farmers in good shape with assets far outpacing debt.

“There’s plenty of capital in farm country,” Jesse said, because in the past two years farmers have paid down debt, built barns and added new equipment, all paid for with the high commodity prices, especially corn and soybeans.

Milk production was strong in 2008, but prices fell for bulk milk, and that may be a problem for some Wisconsin farmers.

“The ones that are buying most of their feed, and the highest leveraged farmers, are probably the most vulnerable,” said economist Robert Crop, a long-time dairy specialist for the UW-Extension.

Those problems could help out Wisconsin’s competition with California as the cheese production champs, economists suggested.

“The western farmers are having a tough time getting food for dairy cows, which means they may look to liquidate herds in 2009 if feed prices outpace milk.” Jones said, “Here in Wisconsin, we have an advantage on feed production.”