Good milk prices brings good spirits at Dairy Strong conference
Some 500 dairy producers and industry representatives attended the sixth annual Wisconsin Dairy Business Association (WDBA) sponsored Dairy Strong business conference in Madison last week. As always, WDBA conferences are upbeat and inspiring as they would be when an audience of top flight dairy farmers, big and small, get together.
My conversations with attendees lead me to believe that dairy producer spirits are at a much higher level than in the past few years. And, why not? After five years of discouragingly low milk prices, producer milk checks have grown to what most would see as a profitable level and the bills can be paid.
As always, I spent most of my time talking with producers and suppliers trying to get a handle on the business of dairy agriculture. What I learned in several conversations:
- We have began replacing the funds into the farm accounts we had borrowed from such as machinery replacement and repair, several producers commented. Thus, we held off buying some needed replacement equipment.
- We will probably go ahead with a new calf facility, a central Wisconsin dairyman projected.
- Although they liked the rise in milk price, several farmers said they were in no hurry to enter a spending mode. "Let's see if the dairy market holds and prices remain stable for awhile," a dairyman from eastern Wisconsin says. "Let's see what the export market does, and China before we make any major moves."
Came through OK
But, all in all, it would seem that members of the Dairy Business Association came through the lengthy milk price period in rather good condition. A group of farmers talking around a table thought that DBA members are good financial managers as well as being good milk producers. They agreed that they had not heard of any foreclosures or serious financial situations among members. "Isn't that the way it always is," one farmer says. "The farmers that really need the information offered here and at Professional Dairy Producers meetings don't or can't attend while the all ready good managers attend to learn more and get better."
A host of keynote speakers ranging from Dr. Kate Darling, the MIT expert who told of studies on human-robot interaction, something now occurring and will be more important in coming decades to Brett Sciotto who predicted that a storm of market dynamics, innovation, demographic shifts and new management philosophies will propel farmers of the future to defy current business and wisdom models. Other speakers presented motivational encouragement to the full room of listeners.
Attendees also had the opportunity to participate in a series of "Learning Track" discussions, "Innovation Stage" presentations and "In Booth" presentations; visit some 60 commercial exhibits and, of course, talk with each other. As I often have written, my guess is that the networking conversations among attendees are perhaps the most important events taking place at dairy producer meetings. Information flows fast and free as attendees talk, listen and learn from each other.
Jim Winn, a Lafayette County dairy farmer was honored by the Dairy Business Association as its 2020 Advocate of the Year. Winn of South Wayne, who with partners Brian and Randy Larson owns Cottonwood Dairy, has had a long career in the dairy industry including co-hosting an annual Day at the Dairy event, which draws hundreds of elementary school students to the farm. He's also helped form the Lafayette Ag Stewardship Alliance, a farmer-led group focused on protecting and improving water quality.
Also at the conference, DBA members re-elected three members to its board of directors including: producers Amy Penterman of Thorp, and Lee Kinnard of Casco, and industry representative Jack Hippen of Madison. Heidi Fischer of Hatley was newly elected to the Edge Dairy Farmer Cooperative board, while incumbent Jerry Meissner of Chili, was reelected to another term.
The Wisconsin Dairy Business Association dates back to 1999 and has become the leading lobbying power of the state dairy industry. It represents some 350 farmer members who milk over 300,000 cows.
Milk price: A summary
The past five years have seen a declining milk price paid to dairy producers. In the last several months the price has risen and milk checks have risen to what some might call a normal range.
The milk price often referred to as normal and which many economic references are made occurred in 2014 when the All-milk price in Wisconsin averaged $24.50 per hundredweight with a peak of $26.60 per hundred in September.
The All-milk price in 2015 averaged $17.80, a decline of $5.70 per hundred over the 12 month period — that's a lot of money to not get.
2016 saw the average All-milk price paid to producers drop to $16.80 or another $1 per hundred pounds of milk.
In 2017, the All-milk price recovered a bit to $18.10. a gain of $1.30 per hundredweight but in 2018 the price again went down to $16.50 or a drop of $1.60.
The 2019 data is not yet available but the All-milk average will probably be in the $20 range which will be close to the perceived normal years of 2011 - 2013.
Summarizing: Dairy producers faced a price decline of $24.50 to a one year low of $16.50 (that's $8.00 per cwt. and a much smaller milk check) over the course of the past five years.
At the same time production costs have risen.
That's what the milk pricing discussion has been about. If history repeats, there could be several years of decent producer milk prices before another depression. Will that happen? If so, then what? That is a question yet to answered.
John Oncken is owner of Oncken Communications. He can be reached at 608-572-0747, or email him at email@example.com.