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Looking Ahead for Agriculture
Highlights from the Ag Economic Outlook Forum

“Farm income isn’t good, but it’s not getting worse,” according to Dr. Paul Mitchell, Professor in the Department of Agricultural and Applied Economics at UW Madison who presented at the 2018 Wisconsin Agricultural Outlook Forum.  Each year, I attend this forum that is hosted by the Renk Agribusiness Institute at the University of Wisconsin College of Agriculture and Life Sciences. This forum offers an analysis of the national and Wisconsin farm economy and forecasts for the future of agriculture over the next year. If you would like to review the data, information and ideas presented, please visit: http://www.renk.aae.wisc.edu/  
The first session of the day focuses on data and statistics related to dairy, grains, livestock and specialty crops. The experts review the outcomes of the last year and offer a forecast for 2018 based on their studies and trends in the wider marketplace. I always find this discussion to be interesting and enlightening. It also confirms some of the things that I hear from farmers throughout the 17th Senate District.
This year, we heard a lot about exporting our agricultural goods to other countries and the importance of these markets.  Most of us know that Wisconsin is very good at agriculture.  We are so good that we must have other markets throughout the world to buy our products in order to survive. According to Dr. Mark Stephenson, Director of Dairy Policy Analysis and the Center for Dairy Profitability at UW Madison, “in the last three years, no state has put more milk into the market than Wisconsin.”
The United States is one of the top five dairy exporters in the world along with the European Union (EU), Argentina, New Zealand and Australia. US exports of dairy products are up by 4%.  Stephenson’s analysis showed data that directly correlates a downturn in exports to a downturn in milk prices.  However, the strong US economy is helping the consumption of dairy products domestically, which helps the industry weather changes in the international marketplace.
Despite declining prices for milk, the price hasn’t dropped below the fixed price of production. This is keeping people farming. Stephenson expects the price to continue to decline until the second quarter of 2018, when he predicts an increase.   But he reiterates that the EU is in the driver’s seat for pricing because of the sheer volume of milk they produce.
When it comes to livestock and grains, Brenda Boetel, Professor and Department Chair of Agricultural Economics and Agricultural Marketing at UW River Falls told us that both the Wisconsin livestock and grain markets are significantly dependent on exports for their success.  In fact, 21% of pork produced in Wisconsin is exported.  Mexico is our biggest export market, but this is declining.
Boetel said that the beef market in 2018 will be positive because domestic beef consumption directly correlates to our domestic economy.  As people perceive an improving economy, they historically consume more beef.  She also predicted a very successful 2019 as well.
This is good news because 30% of the beef exported out of the United States is imported by Japan. However, Japan takes a 39.5% tariff on US beef, which is costly to our producers. Other countries, with whom they trade, do not have as high a tariff. This is something we need to manage.
Boetel said that when livestock is doing well, it is likely that the grain market will not be doing as well. The price of grain directly impacts the costs of raising livestock. The supply of corn has been stable, but our corn exports have decreased by 23%.  She said that fewer acres will be planted in corn this year and will be replaced by soybeans.
Several highlights shared at the forum cause me great concern.  Experts watching the ag-economy highlighted several key indicators to determine the health of agriculture in our state: borrowing and bankruptcy filings. These are not pleasant topics, but they are evidence of a striking reality that our farmers face every day and we must be aware of them to seek solutions.  
Mitchell said that 2017 was a record year for loans via the Farm Service Agency (FSA). Unfortunately, this is also noted as a concerning factor because the FSA is often considered the lender of last resort for farms. Larger numbers at FSA mean that farmers aren’t able to secure financing from traditional lenders.
Mitchell also noted that Chapter 12 bankruptcy filings have also increased.  In the past year, 41 farms filed for bankruptcy in Wisconsin. I have also heard, anecdotally, that there are a similar number in the pipeline headed toward this end. This is a serious concern for communities that rely on agriculture as a main industry and economic driver.
The farmers in the 17th Senate District are some of the hardest working, intelligent, thoughtful people I have ever met. They make difficult decisions to manage their farms, employ their neighbors and contribute to their communities every day.  These are the men and women who serve on our town boards and send their kids and grandkids to school while feeding the world.  They reinvest in our communities and drive our rural economies. I am committed to continue serving the farm families of the 17th Senate District and will be seeking solutions to the issues I learned about today.
For more information and to connect with me, visit my website http://legis.wisconsin.gov/senate/17/marklein  and subscribe to my weekly E-Update by sending an email to Sen.Marklein@legis.wisconsin.gov. Do not hesitate to call 800-978-8008 if you have input, ideas or need assistance with any state-related matters.