Wisconsin Ag Connection - 'Status of Wisconsin Ag' Report Shows Highs & Lows

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'Status of Wisconsin Ag' Report Shows Highs & Lows
Wisconsin Ag Connection - 02/02/2007

It was the best of times. It was the worst of times. That's how you could describe the past year when it came to the state's farm economy in 2006. According to the latest Status of Wisconsin Agriculture Summary from the University of Wisconsin-Madison's Department of Agricultural and Applied Economics, total net farm income in the Badger State dropped by more than 40 percent during the past 12 months--which was the lowest level since 2002.

The report noted that 2006 ended well for corn and soybean farmers; fair for most livestock owners; average for turkey and egg producers; and mixed in the vegetable and fruit sectors. But the study indicated that the larger-than-expected downturn in milk prices weighed heavily on the farm economy. UW Economist Ed Jesse says most experts predicted the average all-milk price to fall by eight percent in 2006. But at the end of the year, that figure was closer to 15 percent.

Meanwhile, dairy farmers saw some optimism as the size of the state's cow herd increased for the first time in years.

"We have finally stopped the bloodletting in cow numbers," said Jesse, who edited the report. "Between 1985 and 2001, Wisconsin was losing more than 35,000 dairy cows per year. But in December of 2006, we had an increase (now up to 1.25 million head)."

Despite the sharp reduction in net income, Wisconsin farmers improved their net worth position. That was mainly thanks to the rising farm real estate values which have been strongly influenced by nonfarm demand for recreational property. Other challenges were brought about as interested rates rose several times during the year by the Federal Reserve.

And so what are the experts predicting for 2007? The report's authors expect an increase in the all-milk price in the range of $0.90 to 1.65 per hundredweight. But gains in dairy profits will be limited by higher costs, they say. Dairy product consumption is expected to increase by about 1.7 percent.

Prices for high-quality hay will also be higher this year because of dry conditions in other parts of the country. Cattle prices are also expected to rise in 2007, along with the cost of raising them.

Wisconsin Ag Connection will provide other highlights of the annual report in the days and weeks ahead.

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