A fifth year of record milk production helped Wisconsin farmers generate near-record income

Wisconsin farmers didn’t have their best year ever in 2013, but they didn’t miss it by much.

“They earned about $3.75 billion in total net farm income, $600 million more than in 2012 and just short of the record of $3.8 billion set in 2012. So we’ve had three years in a row of very attractive net farm incomes,” says Ed Jesse, University of Wisconsin–Madison professor emeritus of agricultural and applied economics.

As is usually the case, the overall financial performance of the state’s farm sector reflected that of the dairy industry, which generates roughly half of the state’s farm revenues, says Jesse, editor of the annual Status of Wisconsin Agriculture report.

According to that report, released today (Wednesday, Jan. 22) at the UW’s Wisconsin Agricultural Outlook Forum, Wisconsin farmers generated a record $5.6 billion in milk sales due to a 1.7 percent boost in production and the second-highest average milk price ever.

But the state’s farm revenues and profits may be down a bit in the year to come. Milk production is expected to increase because of cheaper feed prices in the United States and improved weather in Europe and New Zealand, source of most of the world’s dairy exports. The report’s authors say that average milk prices paid to Wisconsin farmers could drop as much as 5 percent. At the same time, last year’s huge harvest will weigh heavily on the corn and soybean market.

Also noted in the report:

• Wisconsin’s estimated milk production of 27.7 billion pounds set a new record for the fifth year in a row. Wisconsin milk production has shown remarkable improvement since 2004, when the state reversed a 16-year decline in cow numbers. During 2013 the state added 3,000 cows and boosted per cow production by 1.7 percent.
• Livestock producers also did well. Receipts were up 2 percent for meat animals, 7 percent for poultry and eggs, and 7 percent for miscellaneous livestock products.
• Although crop producers harvested a huge crop, they earned $200 million less than in 2012, a year of devastating drought, because a glutted market brought a sharp fall in corn prices.
• Vegetable sales revenues were up $100 million, or 25 percent, from the previous year.
• Three straight years of good income and rising land prices have strengthened state’s farmers collective balance sheet. The value of Wisconsin farm assets was $75.5 billion at the beginning of 2013, up 8 percent from a year earlier. At the same time, farm debt dropped 8 percent to $8.37 billion. The state’s farmers owe $11 in debt for every $100 in assets — a very healthy financial position.

The Status of Wisconsin Agriculture 2014 is published by the Renk Agribusiness Institute in the UW–Madison’s Department of Agricultural Economics and authored by UW–Madison and UW-Extension ag economists and commodity specialists. The report is available free online here.