COBB, Wis. (SPECTRUM NEWS) — For the past five years dairy prices have been depressed, forcing hundreds of farms in Wisconsin to close.
Trade disputes the United States has had with countries like Mexico and China have helped keep dairy prices down in the past few years according to Mark Stephenson, director of dairy policy analysis at the University of Wisconsin – Madison.
“It's had a real impact, there's no question about that, I don't think we can blame trade for all of the problems because we were into the downturn in prices before the trade disputes got started, but they have certainly prolonged a recovery,” Stephenson said.
Stephenson said a large problem for Wisconsin is the significant decline in whey exports. Mexico and China were usually large buyers of whey from the U.S.
There is some worry that buyers in other countries have moved on to dairy producers outside of the U.S.
“During that time we damaged relationships with our partners and they also looked to try to make sure that they don't have all of their eggs in one basket,” Stephenson said.
Laura Daniels, a dairy farmer from Cobb, Wisconsin, is worried about that too.
“When we have to sit out, we know that there's a catch-up game and that will take a long time, and we'd like to be able to get into those markets now, instead of years from now,” Daniels said.
Daniels has owned her farm with her husband for 15 years. The past five or so have been more difficult to maneuver with consistently low milk prices.
“Then you add on to that these trade disputes and we are sure that it has had a direct impact on our milk price, it's hard to know exactly how much, but it's significant,” Daniels said.
She's hopeful that the U.S., Canada, Mexico trade agreement will pass congress soon.
“I wish that the people who are making those decisions, I wish them well, because they have an important and difficult job, but I really hope they also are considering the impact that it's having on us out here,” Daniels said
She never anticipated the trade disputes to go on this long or have as much of an impact.
The length that the low prices themselves are unexpected according to Stephenson.
“The cycle that we've been in this period of time has been long, we are now in the fifth year of these relatively low prices, so it's not that the prices themselves have been low, it's that they've been persistent,” Stephenson said.
In the past five years, 2,681 dairy farms have closed in Wisconsin. Since the beginning of 2019 634 farms have sold their herds.
There is some reason for optimism, Stephenson said. Prices have started to rise a bit, nearly $3 more per hundredweight than this time last year. However, it's still not enough.
“We're at prices right now that are probably long-term livable for many of the dairy farmers,” Stephenson said. “But you've got to remember if this was a long-term average price they can live at we've just been through a big downturn so they need to have some better than average prices to help restore their balance sheets and get them back to a better place.”
Stephenson said he thinks prices could raise another $1 per hundredweight in the next year. Which still isn't likely significant enough to help restore balance sheets.
For Daniels, the low prices and the potentially fewer international trade partners aren't the only problems. The uncertainty hurts farms like hers too.
“I think as a dairy farmer the uncertainty is just as hard to weather as the lower price because we want to believe we have a great future in this business, and right now it's just a little bit difficult to see that,” Daniels said.