Here & Now

How Can Farmers Adapt to Falling Milk Prices?

Frederica Freyberg:
Now to another Wisconsin economic story, the shrinking number of dairy farms in our state. The dairy crisis in Wisconsin is perhaps best understood by hearing from the people living it. Tonight we share an excerpt from reporter Andy Soth’s documentary “Portraits from Rural Wisconsin.” In this segment, fourth-generation Pepin County dairy farmer Weston Patnode shares what it’s like to lose the herd.

Weston Patnode:
The financial part was the big problem. Milk prices are the same as they were in the ’70s or ’80s. Things got really tight. And we paid the bills when we could. And hoped we could continue to pay them. And then we kinda started to fall behind and it just got to where we weren’t gaining ground.

Boy:
Yeah, that’s how high it can go.

Andy Soth:
They talked to bankers about expanding and came close to signing for a $2 million loan, but didn’t want to risk losing their land or burdening their children with debt.

Weston Patnode:
They’re nine and five, so I don’t want to tie them down right now.

Jenni Patnode:
Yeah.

Weston Patnode:
That was part of it, too, when we were asked to expand, is that they’re nine and five. They can’t make that decision. If they were 20 and they said, “Yeah, we want to go all in.” We probably could have. But whatever they decide to do, they’re just responsible and kind, caring people at the end of the day. That’s what we’re hoping for.

Andy Soth:
It’s been only a few weeks since they made the decision to get out. The memories are still raw and it’s hard to talk about that last milking and saying goodbye.

Jenni Patnode:
I’ll talk. I’ll talk. It was hard. It was something that we knew would be hard, but we didn’t realize it would be as hard as it was. And we didn’t realize how hard it would still be.
So I wrote a blog, kind of to just tell everybody, for our family and friends to know. Tomorrow morning the alarm clock will go off early, 4:30 a.m. to board our dairy cows on trucks and trailers, for them to live on other farms. There isn’t a book for this. There probably should be, but no one wrote about what to do next when you sell your fourth-generation family farm. No one wrote a book about how to get through that last milking. Tears never seeming to end as you hold each other tight with no words to be spoken. No one wrote a book about where to go from here or how to get over the emotions of the loss you feel in the pit of your stomach, the heartbreak. No one wrote a book that tells you how to get over that feeling of failure even though you know you gave it your best to the end.

Andy Soth:
Through Facebook, Jenni’s post was shared thousands of times.

Weston Patnode:
Our phones were blowing up that night, for the next week, just text messages, phone calls. Like you said, messages online from all over the country and the world. It was quite amazing. I mean…

Jenni Patnode:
Yeah.

Weston Patnode:
…the outpouring of support.

Andy Soth:
Witnessing the widespread interest in their story, Jenni and Weston say that much more than their dairy herd was being lost.

Jenni Patnode:
I think a sense of the culture of America. I mean, really, they say like Wisconsin, America’s Dairyland.

Weston Patnode:
I think growing up, the family helping the next family down the road. The responsibilities we learned as kids, the work ethic. I don’t know if you see that as much.

Andy Soth:
While Weston weight his work options, they all enjoy the unexpected family time together.

Jenni Patnode:
Even if our kids aren’t going to grow up milking cows, it’s still important to us that they still get that same work ethic into them that you did.

Weston Patnode:
I still want to be able to raise my boys in the 400 acres here we have tucked back in this valley. Get down. There you go.

Frederica Freyberg:
Our partners at WisContext.org have been reporting on the dairy crisis and specifically low milk prices. We talked with reporter Will Cushman on location about the current state of prices for milk.
Hey, Will. Thanks very much for joining us.

Will Cushman:
Of course.

Frederica Freyberg:
So the Patnodes clearly are not alone. What are the numbers of dairy farmers going out of business in Wisconsin?

Will Cushman:
Sure. Wisconsin’s lost about 750 dairy herds in the last year. That equates to a little over 8% of the state’s dairy herds. Wisconsin’s been losing dairy herds for quite a number of years now, but the number is usually closer to 3% to 4% loss per year. So this is quite a bit higher than usual.

Frederica Freyberg:
We have a map of seven counties in Wisconsin which have lost more than 20% of their dairy herds over the last two years. Where is this most acute?

Will Cushman:
The most — it’s being most acutely felt in Eau Claire County, it looks like. Eau Claire has lost over 25% of their dairy herds in the last two years. So yeah. Particularly hard hit around that region.

Frederica Freyberg:
What are the special conditions that make Eau Claire the hardest hit in the state?

Will Cushman:
Sure. I talked to an Extension agent up there, and he told me that Eau Claire County has a lot of smaller dairy farms. A lot of those have less financial wiggle room when times get tough. And also there are a number of farmers who are approaching retirement age who are deciding to get out of the business rather than risk their retirement.

Frederica Freyberg:
And kind of the whole western part of the state seems to have those counties with that high percentage of dairy farmers going out of business or at least culling their herds. What is the current status of milk prices?

Will Cushman:
Sure. Yeah. The milk prices right now are at about $15.60 per hundredweight in Wisconsin. That’s slightly above the national average, which is $15.30. And it’s quite a bit below the all-time high that we hit in 2014, which was at about $24.

Frederica Freyberg:
Why did the bottom drop out of prices just from 2014 to today?

Will Cushman:
Right. Yeah. It really started falling in 2015 and it’s been hovering around $16 or so pretty much since then. I talked to some economists here in Wisconsin who say that a lot of that has been driven by dairy export markets. In 2005, American milk prices aligned with those of the world’s major dairy exporters, including the European Union and New Zealand. And in 2015, the E.U. eased a rule that had set milk quotas on member countries. So a lot of member countries really ramped up milk production, flooded export markets. At around the same time, New Zealand had a really great year for milk production that further flooded dairy export markets. And since then, ongoing trade wars with some of our major trading partners, including China and Mexico which are major dairy export markets for the U.S. have not been helping.

Frederica Freyberg:
What is the expectation about when prices might rebound? Does anybody know that?

Will Cushman:
Yeah. It’s really hard to forecast. Essentially because milk prices seem to be so closely linked with dairy export demand. Essentially export demand would have to kick back up. Get some of the surplus dairy products out, flush them out of the market and then hopefully we’d see a rebound in prices.

Frederica Freyberg:
In Wisconsin, which dairy operations are doing well in this climate?

Will Cushman:
Sure. I talked to a professor at UW-Platteville, Kevin Bernhardt, who’s done some research related to this. And he’s actually found that dairy farms, herds of all sizes, there are some farms that are able to remain profitable even in these tough times. Even the really small herds, about 20% of all herds are able to maintain a cash flow right now.

Frederica Freyberg:
And —

Will Cushman:
But generally the larger farms are able to make it work a little bit more easily.

Frederica Freyberg:
And I know that in your reporting you talk about that. And yet this professor you spoke with, I believe you said at Platteville, said that there are farms of all sizes that are still able to maintain their profitability. But what kind of operations are mostly not able to hold on right now?

Will Cushman:
Yeah. It’s — the farms that have a high debt burden. Ones that are unable to maintain that cash flow. A lot of times that is the smaller farms. Oftentimes the larger operations just have more capital to work with.

Frederica Freyberg:
And then as you were suggesting earlier, too, many farmers are just aging out. I mean, they’re getting to retirement age. And so the demographics have something to do with it as well. Just briefly, with less than a minute left, what are people trying to do to try to remedy this crisis?

Will Cushman:
Yeah. In the state of Wisconsin, there’s a Dairy Task Force 2.0, is what it’s being called. Former Governor Scott Walker put that together last year, I believe. And a bunch of experts from around the state, including Extension agents and other people from the dairy industry, are working on solutions. This is also including people from the UW System are working on solutions to the dairy crisis locally. I also know that the USDA is thinking about going to hearings either this year or next to see about tweaks to how it does its milk pricing.

Frederica Freyberg:
Will Cushman, thanks very much and thank you for your reporting.

Will Cushman:
Of course. Thank you.

Frederica Freyberg:
Will Cushman’s series of reports on milk prices and the challenges in Dairyland can be found by clicking into our partner’s at WisContext.org.