'Losing two farms a day': Wisconsin is facing a serious dairy crisis

Adriana Belmonte
Associate Editor

Wisconsin leads the nation in farm bankruptcies this year, and dairy farmers are carrying the brunt of the burden.

According to NPR, nearly 10% of Wisconsin dairy farmers may go out of business in 2019. And Wisconsin has seen an increase in suicide rates over the last few years. According to the Wisconsin State Journal, experts are attributing many of those deaths to farmers facing economic challenges.

“You look at the weather, you look at the crops you can’t get off the field, you look at the bills you can’t pay,” Patty Edelburg, vice president of the National Farmers Union, told Yahoo Finance. “Bankruptcies are up. Wisconsin is attributed as the No. 1 bankruptcy in the nation right now, when it comes to dairy farmers. That number is up, I think, 24% from last year already. We’re losing two farms a day.”

Dairy farmers are facing big challenges. (Photo: AP Photo/Cara Lombardo)

They’re literally being denied loans’

Over the past 15 years, there has been a 49% decrease in the number of dairy farms in Wisconsin. U.S. Courts data reveals that the Western District of Wisconsin had the highest number of Chapter 12 farm bankruptcies in 2017. And between 2016 and 2018, Wisconsin lost almost 1,200 dairy farms. (The USDA saw a 6.8% decrease in farms across the country in 2018.)

“Farming is such a stressful occupation by itself,” Edelburg said. “When you start adding financial stress on top of it, it’s just going to add more stress. Farmers can’t pay their bills, they have no extra money, they have people honing down their neck looking to pay bills. They’re going to banks and they can’t get loans. They’re literally being denied loans.”

She explained that the USDA farm agency trains its farm loan officers in how to look for warning signs as part of suicide prevention.

“The bankers are the first and the forefront to see a lot of these things,” Edelburg said. “They’re delivering the bad news, and these farmers are dealing with it on that level.”

Wisconsin has the second highest number of dairy cows among U.S. states. (Chart: USDA)

Farming is in his DNA’

The plight of Wisconsin dairy farmers has come under the spotlight recently. On Tuesday night, Wisconsin’s agriculture secretary nominee, Brad Pfaff, was denied his post. This came after Pfaff criticized the state legislature’s budget committee for refusing to release funds towards farmer mental health.

He noted that the current budget of the Department of Agriculture, Trade and Consumer Protection (DATCP) had only enough money to help five farmers, and that the committee members had a choice to make: “Which five farmers will it be?” This didn’t sit well with the Senate GOP who voted successfully against Pfaff’s confirmation.

“Governor Evers is right about one thing: farmers are struggling,” Wisconsin Senate Majority Leader Scott Fitzgerald (R) said in a statement. “Unfortunately, his pick for DATCP secretary was part of the problem, not the solution. He tried to place burdensome rules on Wisconsin farmers at a time they can least afford it and repeatedly engaged in partisan political games targeting the Legislature. The liberal Evers Administration has been no friend to farmers. The Senate will continue to take its role of oversight seriously and will exercise our responsibility to hold them in check.”

Wisconsin’s Senate Democratic Leader Jennifer Shilling (D-La Crosse) was among those in support of Pfaff’s nomination.

“Brad was raised on a family farm in western Wisconsin and has dedicated his life to improving outcomes for our farmers,” she said in a statement. “Simply put, farming is in his DNA. At a time when Wisconsin in the middle of a dairy crisis, it is irresponsible and callous for Republicans to reject the appointment of Brad Pfaff. Wisconsin communities are sick and tired of these petty political theatrics. It’s time for Republicans to accept the results of the election last fall.”

Tina Hinchley moves cows from a barn after their evening milking on the farm she works with her husband Duane on April 25, 2017 near Cambridge, Wisconsin. (Photo: Scott Olson/Getty Images)

Darin Von Ruden, the president of the Wisconsin Farmers Union, said that Pfaff was right in his comments on farmer mental health.

“The real struggle that a lot of farmers face is when you are that third, fourth, even fifth generation to be on the land and all of a sudden, you become insolvent,” he told Yahoo Finance. “The bankers or the creditors start coming after your farm and you end up losing it.”

He added: “In a lot of cases, it’s not any fault of that farmer themselves. It’s really the system we have here in the United States. We’re told on a monthly basis that we need to produce more to feed the world. More and more of the world is starting to feed themselves and that’s part of the reason that production in the United States is starting to affect our prices so much.”

‘We have no brakes on the system’

Wisconsin produces the second-highest amount of dairy in the U.S. (Chart: Statista)

Although there are numerous factors at play, the “main underlying cause” is the fact that there is overproduction, according to Wisconsin dairy farmer Sarah Lloyd.

“Farmers get pretty stuck with unpredictable prices,” she told Yahoo Finance. “And so when the price is low and you’ve got a bunch of debt to service, the banker says, ‘Well, why don’t I lend you some more money and you can put some more cows on, and then you’ll be better able to service your debt?’ Then, when prices go high, obviously everyone scrambles to produce more to take advantage of the high prices. So, we have no brakes on the system.”

Lloyd added: “If you take an Econ 101 class, you would imagine that when prices were low, that would reduce production because people would be backing off in response to the low price signal from the market. But people don’t do that because they have to pay the bills. So, to me, it’s like we’re on a treadmill and we don’t have any brakes on the treadmill.” 

Trade uncertainty is another factor at play for Wisconsin dairy farmers. As of June 2019, total U.S. dairy exports were down 8.1% year-to-date compared to 2018, according to data provided to Yahoo Finance by the U.S. Dairy Export Council.

Aside from the U.S.-China trade war, which has been a game of tit-for-tat tariffs since March 2018, dairy farmers are also still waiting for ratification of the U.S.-Mexico-Canada Agreement (USMCA), which some see as a gateway for more dairy markets.

Dairy farmer Fred and Laura Stone work on their dairy farm in Arundel, Maine. (AP Photo/Robert F. Bukaty)

However, Edelburg doesn’t think the USMCA is a “fix-all” for dairy farmer woes.

“The little bit of product that we’re going to trade with Canada is going to be minuscule compared to the amount of product that we need to get off the supply,” she said. “There’s only so much that you can trade to Canada. They already have enough milk. The amount of milk that we’re going to trade up there is going to be minuscule compared to what we need to get out of the country. We still have way too much supply in this country to think that Canada’s going to be a fix-all. We have to find more, better export markets. Canada’s not the fix-all for that.”

Adriana is an associate editor for Yahoo Finance. Follow her on Twitter @adrianambells.

READ MORE:

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.