More dairy farms folding and Wis farmers going bankrupt means Evers has more to clean up

This headline accompanying a recent story from Rick Barrett in the Milwaukee Journal-Sentinel is pretty alarming “Wisconsin dairy farmers barely hanging on as crisis deepens with no end in sight.”

As of Nov. 1, the dairy state had lost 660 cow herds from a year earlier, and the number of herds was down nearly 49 percent from 15 years ago. The number of dairy cows in Wisconsin has remained steady even as the number of farms has fallen. That’s because the remaining dairy operations are, in many cases, much bigger. But even some of the bigger farms have not survived.

For many farmers, it’s no longer a matter of how they’re going to endure a fourth year of financial hardship. Rather, it’s how they’re going to exit the business and get on with their lives.

And the rate of failure in those farms have been picking up. 87 went out of business last month alone, the most in 7 1/2 years last month in Wisconsin.

The Journal-Sentinel article also describes the situation of Emily and Brandi Harris, who operate an organic dairy farm near Monroe. Their cooperative is looking at a 33% cut in what they get for milk after their current contract runs out in May, and they’ve reduced their herd total from 50 to 30 while Brandi has gotten an off-farm job to make ends meet.

Emily Harris says that she plans to stick it out, but not because it’s a workable living.

"There's just nothing in dairy farming that makes any money right now," she said.

"A lot of our income needed to make repairs, or to do something like replace a roof, used to come from selling 20 heifers for about $20,000. Now, heifers aren't worth $300 each. We've lost any extra income we used to have."

In addition to Wisconsinites walking away from their dairy farms, the Minneapolis Star-Tribune noted over the weekend that many farmers are officially going broke on top of this.

Farm bankruptcies are on the rise in Minnesota and across the Upper Midwest.

Eighty-four farms filed for Chapter 12 bankruptcy in Wisconsin, Minnesota, North Dakota, South Dakota and Montana in the 12 months that ended in June, according to a new analysis from the Federal Reserve Bank of Minneapolis. That’s more than double the number over the same period in 2013 and 2014, and the number of bankruptcies in Minnesota doubled over the past four years from eight to 20.

Banks are also seeing more farm borrowers fall behind on their payments, and the worst is likely yet to come.

“Current price levels and the trajectory of the current trends suggest that this trend has not yet seen a peak,” Ron Wirtz, an analyst at the Minneapolis Fed, wrote.

And as the report from the Minneapolis Fed notes, Wisconsin is where the majority of those bankruptcies are taking place.

Not surprisingly, bankruptcy numbers inversely follow the rise and fall of commodity prices. After a comparatively steep spike in chapter 12 filings during the Great Recession—that 2010 peak—ag prices started rising across the board, and bankruptcies logically pivoted and started to decline. Farm bankruptcies bottomed out in 2014, but again pivoted as high prices reversed and have remained low (Chart 2).

But not all states are feeling the same effects. Wisconsin, for example, is seeing about 60 percent of all bankruptcies among Ninth District states. It appears that bankruptcy filings have been particularly high among dairy farms there. Though the state is the country’s number two milk producer, it still has many small farms, which tend to be more exposed to large price fluctuations. The average dairy herd in Wisconsin is still just 153 cows; in California, the average herd is 1,300.

It’s clear that unless there is governmental action taken soon in Wisconsin, the state’s dairy farms and many other agricultural industries are going to be in a full-fledged depression, if they’re not there already. And the “bigger is better” mentality of Governor Scott Walker and Attorney General Brad Schimel is something that likely added to these bankruptcies and lost dairy farms, as overproduction lowered prices and deregulation and economies of scale gave even more advantages to mega-farms that were allowed to cut corners.

Which means Walker and WisGOP has dumped another mess on the desks of Tony Evers as Governor and Josh Kaul as Attorney General that they're going to have to clean up. The everyday small farmer are the ones in need of assistance and stabilization, not the mega-farms, so targeting aid to the everyday farmer that's struggling seems like something that should be emphasized by Evers when he takes over in 6 weeks.

And it seems like that's a much strategy than literally continuing to give away the farm to Big Ag donors companies who have had their tax rates lowered to near zero due to the M&A “Big Giveaway”. Evers called for getting rid of the M&A credit for all companies and individuals making $300,000 or more during this Fall's campaign, and the deepening farm crisis makes this an even better idea today, in order to level a horribly slanted ag economy in the state.