Here & Now

The Economic State of Farming

Frederica Freyberg:

Now to agriculture news and ongoing challenges for state farmers. Governor Tony Evers had some choice words for U.S. Agriculture Secretary Sonny Perdue in the aftermath of Perdue’s visit to Wisconsin this week. Evers said that Perdue “kind of put the pox on small farming and America’s Dairyland.” The governor was referring to comments Perdue made at the World Dairy Expo in Madison. Speaking about the size of farms surviving in today’s economy, Perdue said, “Big get bigger and small go out.” “Here & Now’s” Zac Schultz caught up with Secretary Perdue after the World Dairy Expo appearance. Zac asked him to clarify his statements about the decline of small farms, which last year, were shutting down in Wisconsin at a rate of two per day.

Sonny Perdue:

Again, what I see happening nationally, a lot of the smaller dairies who want to continue in the dairy business are doing value-added. They’re doing some of their own processing. Whether that’s a creamery, whether it’s ice cream or other types of products and they’re being very successful. That’s not for everyone. But the economy of scale in agriculture, particularly dairy today, the capital investment is so great. It’s pretty tough out there. I will note though that the new Farm Bill, the 2018 Farm Bill, provides a lot of help for smaller dairies that were not helped in the ’14 Farm Bill. I think that’s a big change. I would ask them to investigate that and certainly apply for that Dairy Margin Coverage Program as well as the Farm Bureau Insurance Program. I think it’s a risk management that helps them really have a minimum price for their dairy products.

Zac Schultz:

In a state like Wisconsin, there’s an emotional attachment to small farms. For economic reasons, do we need to put some of that emotion aside when understanding that some small farms will just have to go away?

Sonny Perdue:

Well, that’s an interesting question. In America, we’re not–whether it’s farming or any other small business, there’s no guaranteed success rate. That’s unfortunate because we do have a sentimental attachment to small family farms. It’s just that the economy of scale in agriculture and the economics of farming has become so tight in recent years that it’s very difficult to make farming on small herds or small acreage there unless you are a high-value type of crop. And many young farmers are beginning in high-value type crops. I was, last week, in Michigan in three-acre cut flower operation. There are ways to grow. We’re also seeing a lot of effort in the direct farm to table movement in the high-value crops, specialty crops that young beginning farmers are active in. But the commercial idea of getting out here and having the finances to buy 1,000 acres and do commercial scale farming is difficult these days.

Frederica Freyberg:

U.S. Secretary of Agriculture Sonny Perdue. For reaction to Secretary Perdue remarks, as well as his own approach to sustain Wisconsin farms, we turn now to State Secretary of Agriculture-designee Brad Pfaff. Thanks for being here.

Brad Pfaff:

Thank you for having me.

Frederica Freyberg:

As you know, Secretary Perdue caused some consternation during his Wisconsin visit this week by saying farmers may have to get bigger to survive. How true is that?

Brad Pfaff:

Well, we’ve all had economics. We understand what economy of scale mean. But we also understand what we have here in Wisconsin. We have the Wisconsin way. Our farms are not New England and our farms are not California. Our farms are created here in Wisconsin. They’re of all sizes, shapes and scales, to be honest with you. We also have a system of agriculture in this state that is built upon value-added, differentiation of product. We can take the milk that is produced from our high-quality dairy cows in the countryside here and we can make it into high-quality cheeses that are enjoyed by consumers from around the world. That provides value along the supply chain. It also employs people not just on the farm, but also within our small towns and our rural communities. Anytime that anybody makes a comment saying you gotta get big or get out, that doesn’t sit very well with our family farmers. And quite frankly, it also–we need to better understand really what is happening within the countryside. And so there is pressure on the countryside. We all recognize that. But rather than saying you either have to get big or get out, I think we need to look at new ways in which we can make sure that we can continue to keep our farms profitable going forward regardless of their size or scale.

Frederica Freyberg:

Speaking of global markets, how badly have federal trade and tariff policies affected Wisconsin farmers?

Brad Pfaff:

Well, they definitely have. Our farmers have been hit with a triple whammy this year. We’ve had very difficult weather. We’ve had five years of low prices and then we’ve also had this international trade uncertainty. Everybody’s being impacted in the rural communities, quite frankly, when we do not have markets that are open. China is the second largest market for Wisconsin agriculture products. We need to be able to find more markets for our agriculture products. I am happy to say in 2018, Wisconsin agriculture products were shipped to and enjoyed by consumers in over 200 countries. But having said that, we need to recognize what happens when one of the largest trading partners all of a sudden their market says no more. We don’t want your product. What are we going to do? And that has had a dampering effect on our farmers and our rural residents.

Frederica Freyberg:

Let’s take another listen to U.S. Ag Secretary Perdue on this very matter.

Sonny Perdue:

President Trump has been very generous last year and this year with $12 billion and $16 billion trying to tide us through these trade disruptions. But let’s not count on that. I think every farmer would rather have a good crop at a fair price than a government check and let’s plan on that. It may be a time where we don’t have the optimum profitability we would like. We have to settle for just able to do it next year. That’s what we need farmers to do. Plan for the market, just like they always have and if nothing happens in trade, maybe we can see some help in the future as well.

Frederica Freyberg:

What can you tell us about the billions of dollars of direct aid and how they have reached and helped Wisconsin farmers?

Brad Pfaff:

Well, first of all, the federal taxpayers have provided $28 billion worth of trade assistance to our family farmers. There’s not a farmer that I know that would not rather sell their product than receive government aid. Now, we appreciate the assistance that the federal taxpayers have provided, but these farmers did not ask for this. Farmers want to be able to sell their product. We understand that there’s global economic pressures taking place. We recognize the fact that we need to have a partnership and a trading relationship with countries that is fair and balanced. China has not been fair with what’s happening here. But why? And I still ask this question. I haven’t got an answer. We understand the fact that China and technology and they’ve been taking American technology and they need to be held responsible for that. But why are our family farmers here in Wisconsin and around the Midwest being held responsible for that? Let’s address the issue that’s taking place with China. And I will also say this. Why is America doing this alone? Let’s do it with our partners, may they be in Europe or elsewhere in the country, because what’s happening is China is still buying agriculture products. They’re just buying it from other countries. And so we need to address the China situation. But the thing is is right now the American farmers and the Wisconsin farmers are paying a price for this.

Frederica Freyberg:

How far down did those billions of dollars go to the reach of maybe small farmers in Wisconsin?

Brad Pfaff:

Well, it’s based upon the–it has been based upon your production history. So again, it’s based upon how much corn or soybeans you grow or how much milk you produce. Again, it is capped at a level. So if you’re a very large farm, you will only receive a certain amount of money. But the rest of the–if you’re a smaller scale farm, it will be based upon your production history. And so, again, the assistance is appreciated, but again, much rather sell to the marketplace.

Frederica Freyberg:

Can Wisconsin recover from lost global markets?

Brad Pfaff:

We can, and we will continue to find new markets. This is a growing world, and it’s a protein-hungry world. People want a protein diet. We are a protein-rich state. We feel we have an opportunity to sell our product throughout the world. And we have to build upon the successes that we have. We need to improve our logistics. We need to improve our supply chain. We need to continue to invest in our farmers but also within our processors and the entire supply chain to be able to continue to feed the world.

Frederica Freyberg:

There is some good news. It appears that milk prices seem to be in recovery. If farms are on the precipice of going under, will this allow them to hold on?

Brad Pfaff:

It will. Anytime milk prices go up, that is a good thing. But we also need to make sure we build for the future. We want to have a Wisconsin agriculture that is sustainable. There’s three important tenets to that. Number one, it needs to based economically sustainable. Number two, it has to be conservation sustainable. And number three, we need to build upon our tradition. The tradition that’s sustainable because agriculture is who we are as a people. It’s on our license plates. We’re America’s Dairyland. It’s what brings us together as a people.

Frederica Freyberg:

Brad Pfaff, thanks very much.

Brad Pfaff:

Thank you.