Wisconsin Ag Connection - Gross Farm Sales in Wisconsin Set Another Record in '12

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Gross Farm Sales in Wisconsin Set Another Record in '12
Wisconsin Ag Connection - 01/29/2013

Economists with the University of Wisconsin-Madison say net farm income fell just short of setting new records during the past year, despite the challenges brought on by prolonged drought and record-breaking heat. According to the 2012 Status of Wisconsin Agriculture report, farmers owners collectively earned $3 billion in net farm income, down 21 percent from 2011's record year, but up around $1 billion more than 2010 when farmers were still recovering from the plunging milk prices that put many operations in the red.

UW-Madison Emeritus Professor Ed Jesse says farmers who grew enough of their own feed did better than those who had to buy it last year. But how the year worked out for individual farmers varied considerably.

"If you're a dairy farmer who had enough feed grown on your own farm, for example, you did okay," Jesse said. "If you're buying every kernel of corn that you feed, you probably didn't do very well.

The annual summary noted that Wisconsin's gross farm revenues climbed $100 million from the previous year to set a new record in 2012, which was brought on by higher prices for most commodities like corn. However, higher costs more than offset those gain in revenues, causing net income to drop $800 million.

Jesse says state farmers spent about 13 percent more for inputs and services in 2012. Feed costs accounted for more than half of the increase, but spending was also up 12 percent for seed, nine percent for fertilizer, and 15 percent for pesticides. The average cash rent for land rose 16 percent to $115 per acre.

For the dairy sector, farmers' gross revenues from milk were about the same as in 2011 because of higher production. But higher feed costs cut deep into the profit margins of producers who don't grow their own dairy rations and of those who had to replace homegrown feed where crops failed.

Wisconsin milk production set a new record for the seventh consecutive year out output rose 4.1 percent to 27 billion pounds. For the year ahead, UW dairy analysts project that the average milk price paid to the state's dairy farmers in 2013 will be $20.15, up 90 cents from 2012.

Meanwhile, Jesse further noted that last year's drought sharply reduced yields of non-irrigated processing vegetables, and high temperatures set back pollination and growth even on irrigated vegetables. But yields of potatoes, most of which are irrigated, were up significantly, thanks to a mild spring that allowed early planting followed by a very warm early summer that spurred rapid tuber growth.

Apple production was down 60 percent due to a sequence of abnormally warm temperatures in March, which triggered early budding, followed by a hard frost in April. But yields varied. Some growers had exceptional yields and quality; others lost up to 90 percent of the crop. The tart cherry crop was down 90 percent.

And aggregate net worth strengthened. Assets increased about $4.4 billion while debt was up $700 million. Real estate accounts for three-quarters of farmers' net worth and two-thirds of their debt.

The report was released in conjunction with the 2013 Wisconsin Agricultural Economic Outlook Forum on the UW-Madison campus last week.

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