Guest Editorial  

 

Dairy Cows: Let's Do The Math

Part 1 of 2

Jim Cisler
Dairy Consultant/Owner
Dairy Assets, LLC
jimcisler7@gmail.com

July 26, 2019

Recently, it was announced that the upcoming Farm Aid concert will be held in Wisconsin for only the second time in the 35-year history of the annual event to raise money for farmers in need.

This year, the goal of the event is to increase awareness of the plight of Wisconsin dairy farmers.

Willie Nelson, his friends and organizers of this fundraiser must be aware that in the last five years, the average annual Class III milk price has not exceeded $17.00 per hundredweight of milk and the average since 2014 is $15.30 per hundredweight. So, the question is, how dire are the straits of the Wisconsin dairy industry?

Growing up on a family dairy farm in northeast Wisconsin, I saw most good dairy farmers (my father included) had a pocket-sized ringed notebook with the stubby pencil stored in the ring that was used to make notes, write down projects and to do simple math calculations. This was before the time of pocket calculators and much less cell phones with built-in calculators. When needed, you did some ciphering to determine the correct answer. The answer as to whether the Wisconsin dairy industry is in trouble or not is a simple math calculation.

Before running the numbers, let’s first look at some of the important current data:
1. At the end of 2019, the projection is that Wisconsin will have less than 7,500 dairy farms
2. Over the last three years, Wisconsin is averaging a loss of 600 dairy farms per year
3. The current herd size in Wisconsin is approximately 175 dairy cows (this has been growing by about 15 cows/year)
4. Currently, there are approximately 1.3 million dairy cows in Wisconsin

Now let’s forward these numbers five years and see what they look like: At the end of 2024, if 600 dairy farms continue to be lost each year, there are 4,500 dairy farms left in Wisconsin.

The best assumption on herd size is it will grow to about 250 cows per farm. Let’s assume this might be faster and say it is 275 cows per farm.

This is still about 1.2 million dairy cows, so milk production should hopefully be maintained.

However, beyond this, the eventual problem becomes more noticeable.

Let’s look just two more years beyond: At the end of 2026, there are only 3,300 dairy farms left. Even if the herd size grows to 325 dairy cows per farm, this drops the cow number to just over 1 million dairy cows.

All of a sudden, milk production has started to tighten and run short to fully fill all the processing facilities. Companies are fighting over milk, paying very high milk prices and plants are less profitable and start to close.

At the end of 2029 (just 10 years from now), at the current rate of attrition, there could be fewer than 1,500 dairy farms left in Wisconsin.

Even if the average herd size grows to 500 dairy cows (which is unlikely), that amounts to only 750,000 dairy cows.

Then the Wisconsin dairy industry has a huge problem. It is too late to change course at that point. The train wreck has already happened.

Currently, there seems to be little urgency from Wisconsin citizens, government or the industry itself to notice that this is nearing the point of no return.

Even if it happens slower than these projections, in 20 years without intervention, it could be a near dead industry. Bye-bye Cheeseheads.

There is only a very short window of time to react to keep the Wisconsin dairy industry headed in a positive direction by ensuring the longevity of as many Wisconsin dairy farms as possible.

Today, it may seem like the Wisconsin dairy industry is in good shape. We are producing more milk and cheese than ever before. However, without milk that comes from Wisconsin dairy farms in the future, the Wisconsin dairy industry is going to be in trouble in five to 10 years.

As an industry, we cannot wait until we reach 5,000 dairy farms to react, because by then it will be too late. We can’t avoid the train wreck coming ahead at that point.

We need to say TODAY, that we will do everything in our power NOW to ensure the number of dairy farms in Wisconsin will NEVER drop below 5,000 dairy farms.

With Wisconsin dairy farmers in pain from the last five years of low milk prices, it will take some real effort to keep them going as a good chunk of equity has been lost by many of them.

 

“at the current rate of attrition, there could be fewer than 1,500 dairy farms left in Wisconsin... Then the Wisconsin dairy industry has a huge problem.”

 

John Mellencamp’s (another Farm Aid performer) song, “Rain on the scarecrow, blood on the plow” may be coming to fruition, but let’s do everything we can to avoid that from happening and keep Wisconsin’s dairy farms farming.

See part 2 of this article next week, for insights on solutions to this dilemma and what can be done to address this potential problem on the near horizon.

 

The views expressed in this and Dan Strongin’s column do not necessarily represent the views of the Cheese Reporter.

 



Cheese Reporter welcomes letters to the editor. Comments should be sent to: Dick Groves by Fax at (608) 246-8431; or e-mail your comments to
dgroves @cheesereporter.com.

 

 

 

 

Jim Cisler is owner of Dairy Assets, LLC, a company that specializes in dairy mergers and acquisitions, consulting, finding financing for your projects, referrals and any other services as needed.

Cisler grew up on a farm in Northeastern Wisconsin.