Farm challenges due in 2016

John Oncken
Now Media Group

The ninth annual Wisconsin Agricultural Economics Outlook Forum held Jan. 21 at UW-Madison was far from optimistic as agricultural economists took a look at the coming year in the state's farm scene. That year will be a challenging one, according to the experts.

Mark Stephenson, director of dairy policy analysis in the UW-Madison College of Agricultural and Life Sciences, said strong domestic sales helped maintain milk prices as exports (especially to Russia and China) declined. He expects milk prices to be at or below 2015 levels as international stocks of dairy products are worked down, which is not expected until late in 2016.

Stephenson said the good news is that feed prices will remain relatively low and below the levels of recent years.

Corn demand will closely match production, with the harvest price likely to be 5 to 10 cents below the 2015 price, said Brenda Boetel, UW-River Falls ag economist. Soybean acreage will decrease somewhat, while South American production, along with a big carryover from last year, could mean prices about 25 cents per bushel below the 2015 prices.

Beef herd expansion continues and will increase some 3.5 percent after a decline of 2 percent last year. The average 2015 finished cattle price was down 4 percent from the prior year with 2016 prices expected to decline another 7 percent, Boetel said.

'Wisconsin farm profits were significantly lower in 2015 compared to 2014,' said Bruce Jones, UW-Madison ag economist. 'It is estimated that net farm income fell nearly $1.6 billion, largely because milk receipts were down a like amount. Milk income would have been lower had Wisconsin dairy producers not increased production by 4 percent.'

All in all, it appears that 2016 will be a challenging year for Wisconsin agriculture.

More electricity or not

'Shaping the Utility of the Future' was the theme of the annual RENEW Wisconsin Energy Summit held in Madison the same day as the Ag Economics Outlook Forum. I attended both.

RENEW Wisconsin, which 'aims to advance renewable energy policies ... through advocacy, education and collaborative initiatives with over 60 business members conducting renewable energy business in Wisconsin and over 300 individuals and other organizations who share our vision for Wisconsin,' hosted the event.

I attended to hear a panel discussion made up of representatives of the solar, wind and manure digester industries, each who can have a major influence on the production of electricity.

Farm manure digesters

Steve Dvorak, Chilton, owner of DVO, Inc. built his first digester in 1985 at Packerland Packing in Green Bay ('It's still running today') and represented agriculture at the panel. Each industry spokesperson told of their efforts to produce renewable energy and the need to subsidize their industries by government or the utilities.

Prior to 2001, farm manure digesters were little known. That year, Wisconsin started its Focus on Energy program that required utilities to obtain 10 percent of their energy from renewables — wind, solar, biogas — by 2015.

As utilities worked to reach their renewable energy quota, many bought the biogas from the farmer digester owners for 6 to 9 cents (or more) a kilowatt, making a digester financially feasible. That figure is now down to 3 to 4 cents.

As a result of the lower payback, some farm digester owners — as their expensive engines that convert methane to electricity need repair or replacement — are stopping the engines and flaring off, or burning, the methane gas.

'Here you have a relatively clean fuel that is being released back into the atmosphere,' said Melissa VanOrnum, marketing manager of DVO Inc. 'It is a missed opportunity.'

'The interest in manure digesters varies by state,' Steve Dvorak told the audience. While new manure digester construction is at a low ebb in Wisconsin, North Carolina, California and Vermont are aggressively moving ahead.

More than electricity

In addition to electricity, manure digesters offer farmers odor and pathogen control; nutrient separation; livestock bedding material; and fertilizer, Dvorak explained. The recently constructed digester at the Statz Farm has an ammonia stripping tower that enables them to make ammonium sulfate fertilizer.

DVO, Inc. has built near 100 digesters, including expansion projects in the U.S. with 28 (of the total 34) located in Wisconsin. It also has three international sites, with digesters in Serbia, Canada and China.

They work

I well remember the open house at Gordondale Farms, Nelsonville, in April 2002 to view the DVO-designed and -constructed manure digester that the owners installed during a planned farm expansion. Most of us first-time viewers of the seemingly complicated system of pipes, wires and engine were amazed to see such an engineering marvel and wondered if it would work. Well, it did, has and still does,

I'm most familiar with the two digesters on the Statz Farm at Sun Prairie, with one installed just prior to this year's Farm Technology Days at their new 2,400-cow facility and the other working for several years at the big home farm dairy.

I've always been amazed that Troy Statz oversees both digesters (in addition to other farm responsibilities), while the much-publicized (and three times more costly) Dane County Community digesters have full-time employees on site.

Existing manure digesters have pretty much been built on big dairies of 1,000 cows or more; however, Wayne Peters and sons Rory and Roger, who milk 200 cows at Chaseburg, installed the first 'small-farm' digester made by Universal Sanitary Equipment Manufacturing Company in Tomah several years ago.

Sean Rezin, engineer and anaerobic digester system designer at USEMCO, agreed that the lack of government or utility financial incentives has slowed further digester construction to a halt.

Encouragement needed

'Without a change in the law saying utilities must increase their renewable energy supplies, digesters will find access to the market very difficult here, if not impossible,' said Michael Vickerman, program and policy director with RENEW Wisconsin.

Backers of wind and solar power also told of the value of their energy to the public in terms of clean and environmentally renewable energy and the need for some financial assistance.

All agreed that the Wisconsin Public Service Commission and state legislature are in charge, and at the moment, stable electricity usage and low natural gas costs are not conducive to suppliers seeking and paying for electricity from manure digesters, wind or solar.

My thoughts: Everyone produces waste, and cows produce a lot of it. A manure digester is one way to keep manure off fields. A digester is not a break-even process for most dairy producers, and without doubt, the current electricity-producing fuel of natural gas will eventually rise in price. I'd willingly pay a few cents more on my electric bill to help get more digesters on livestock farms and light more houses.

John F. Oncken is owner of Oncken Communications, a Madison-based agricultural information and consulting company. He can be reached at 608-222-0624, or email him at