A winner from inflation - Wisconsin farmers

Few areas in our economy showcase the level of inflation that we’re dealing with than food prices. And Tuesday’s release from the US Department of Agriculture gave a great illustration as to how Wisconsin farmers are getting a lot more money for their products these days.

The average price received by farmers for corn during April 2022 in Wisconsin was $6.89 per bushel according to the latest USDA, National Agricultural Statistics Service - Agricultural Prices report. This was 55 cents above the March price and $1.74 above April 2021.

The April 2022 average price received by farmers for soybeans, at $15.50 per bushel, was 30 cents above the March price and $1.60 above the April 2021 price.

The April average oat price per bushel, at $5.70, was 31 cents above March and $2.39 above April 2021.

All hay prices in Wisconsin averaged $152.00 per ton in April. This was $1.00 above the March price and $3.00 above the April 2021 price. The April 2022 alfalfa hay price, at $161.00, was unchanged from the previous month but $4.00 above April 2021. The average price received for other hay during April was $125.00 per ton. This was $5.00 above the March price and $4.00 above April last year.

Given the hard times that Wisconsin farmers faced for the last half of the 2010s, this is a welcome turnaround from a producer standpoint, even if it runs up your bill at the grocery store.

It's especially a big reversal for Wisconsin dairy farmers, who got wiped out in historic levels in 2018 and 2019. Those that were able to make it through those tough times are now getting a much larger payoff for their milk.

The Wisconsin all milk price for April 2022 was $27.10 per hundredweight (cwt) according to the latest USDA, National Agricultural Statistics Service - Agricultural Prices report. This was $1.80 above last month's price and $8.20 above last April's price.

The U.S. all milk price for April was $27.10 per cwt, the same as Wisconsin's price but $1.20 higher than last month's U.S. price. All of the 24 major milk producing states had a higher price when compared with March. South Dakota and Wisconsin had the largest price increases, both up $1.80 per cwt.

That $27.10 per hundredweight is an increase of nearly 44 percent compared to a year ago, and is nearly double what milk was going for in May 2020, at the height of COVID-related lockdowns. Milk prices have also gone on an 8 month uninterrupted streak of higher prices, blasting past prior peaks.

It is also nearly $12 a hundredweight above the lows of Summer 2018, a time that was followed by a loss of more than 800 dairy farms in the state for 2019. That rate of farm closings has slowed significantly in the last couple of years as dairy farmers have gotten more money for their milk, and due to bailouts that were given as part of COVID relief packages.

And dairy farms are taking advantage of the higher prices to pump out more milk, with levels staying at the record amounts produced in 2021, which is about 100 million pounds a month above what was being produced before the COVID pandemic.

Given the increasing cost to consumers for dairy products, is there going to be an inflection point where people stop paying so much for these items, and the higher production and lower demand combines to level off and/or lower these prices? Like a lot of things in America in 2022, those changes haven’t happened yet, so no need to adjust at this time.

We often don’t mention that there are winners in times of inflation, but they do exist, especially in the industries that make products whose prices become inflated. And after years of pain, it looks like one of those groups of winners are Wisconsin farmers….if they were able to stay in the business.