MADISON, Wis. — Dairy has more of an economic impact in Wisconsin than ever before. At least according to a new study from the University of Wisconsin – Madison.
Every five years the university compiles the report with census of agriculture data. The report was compiled with numbers from 2017.
The report shows that agriculture has a $104.8 billion impact, that's up from $88.3 billion in 2014s report and $59.16 billion in 2009. Dairy is the largest chunk of that, contributing $45.6 billion. The impact is up from $43.4 billion in 2014 and $26 billion in 2009.
“What we found is that despite the fact that farming, on farm agriculture is struggling right now, the total size of the ag economy has actually increased,” said Steven Deller, a professor of agriculture and applied economics and the author of the report.
Deller said that processing is the largest reason for the increase in economic impact.
“Food processing has been going through a bit of a growth spurt particularly since the end of the great recession,” Deller said
Processing growth is a trend apparent in the dairy industry. In the four years leading up to 2017 more than 1,700 dairy farms sold their herds. In 2019 alone 491 dairies have called it quits. Yet Wisconsin set a record in 2018 for the amount of cheese produced.
Deller said the number of cows in the state is stable, just as farms go under the ones that remain buy up the cows and get bigger.
“What's happening is a lot of the smaller to medium dairy farms are simply not able to continue to operate,” Deller said. “They're getting close to retirement age and they're essentially saying that rather than continuing to a dig a deeper hole, now is the time to essentially pull the plug on the operation and sell.
He says depressed dairy prices have been hurting small and medium size dairies. Trade disputes the United States are in aren't helping either.
“That's kind of watering down the recover in agriculture that we had been expecting to see this year,” Deller said.
Dairy Farmers of Wisconsin says they are worried about dairies closing too.
“Losing family farms and it's one of the tragedies of our time frankly and we hate to see it and we're doing everything that we can to make sure that that doesn't happen,” said Patrick Geoghegan
Senior VP of Marketing and Industry Relations with Dairy Farmers of Wisconsin.
Goeghegan said Dairy Farmers of Wisconsin is looking at expanding to other markets, including international markets to try and sell dairy products. They hope that can slow or reverse the trend of smaller dairy farms closing.
“We think that's the fastest way to grow milk consumption that there is and that's where we're going with our marketing efforts,” Geoghegan said.
Inside the U.S., Wisonsin dairy products get around. Dairy Farmers of Wisconsin say that 27 percent of cheese in the U.S. Is produced in Wisconsin. More than 40 percent of specialty cheeses are produced in Wisconsin.
They say this report shows how important dairy is to Wisconsin still.
“It's a tremendous income generator for the state of Wisconsin,” Geoghegan said.
Geoghegan said that helps the whole state. Not only in jobs and as an economic driver, but in tax revenue. He said dairy produces more than $1 billion in taxes for Wisconsin.
Deller said that processors can end up helping out producers in Wisconsin as the agriculture industry continues to grow.
“One of the things that I think that we need to think about Wisconsin agriculture a little bit more is the processors and the growers working together more,” Deller said.
Deller said that growth in niche markets like hops and cranberries have helped drive the overall economic impact of agriculture in Wisconsin.
“Dairy is still the big dog, and it's part of our culture, but in terms of the economy there's a lot of different aspects of agriculture beyond dairy,” Deller said.
Deller said that one of the surprises from the report has been an increase in beef production. He said as some farms get out of dairy, they switch to beef production as an easier, more cost-effective industry.
Deller said one of the problems for dairies is an aging demographic of farmers. However, it's tough for younger farmers to get financed to begin a dairy operation. He said if the industry continues to grow and dairy farms get picked up with that, banks could begin financing a younger generation of dairy farmers.