EAU CLAIRE — Despite his expectations that 2020 will be a better year for the dairy industry than has been seen in quite some time, Director of Dairy Policy Analysis at the UW-Madison Center for Dairy Profitability Mark Stephenson said those expectations come with a couple asterisks.
Slowing U.S. and world milk production, declining U.S. and world dairy stocks, a relatively strong domestic economy and possible trade improvements are contributing to his positive outlook for the dairy industry, Stephenson said Jan. 9 during the Western Wisconsin Ag Lenders Conference in Eau Claire.
However, he cautioned that prolonged trade negotiations, slowing gross-domestic-product growth in countries like China, weak economies in Europe and the possibility of recession in the U.S. could slow the recovery in the industry.
“I don’t think our milk prices will feel good until we increase our exports a bit more than we have,” Stephenson said to about 150 attendees at the Western Wisconsin Ag Lenders Conference. “But we’ve got some strength in milk prices that I’m forecasting, and I’m looking forward to what we may have in 2020.”
Among his asterisks, Stephenson said there are several economic indicators pointing to a possible recession. Stephenson said those indicators are rarely wrong, but that perhaps there is hope for slow growth rather than a full recession.
“There are a few things Washington can do to mitigate the movements toward recession and to keep the economy strong,” he said. “I suspect they’re going to be pulling on those strings like an unwieldy horse, especially as we’re moving toward election.”
Stephenson said fluid milk sales, which have seen a steep decline since about 2010, are one of the sad stories of the dairy industry. Reasons for the decline go beyond just blaming plant-based beverages, he said, and include declining birth rates and changing consumer preferences.
“The fluid milk industry is a very thin margin business,” Stephenson said. “Thin margins in a declining segment is a poor prescription for plants, particularly at a time when we’re starting to see farm-level milk prices increasing. If that supply chain is going to try to eat some of those increases and not reflect all of it on to consumers, there’s very little room left for that at the fluid milk level.”
Wisconsin lost a total of 818 milk cow herds in 2019, bringing the total number of dairy herds in the state to 7,292, according to the Wisconsin Department of Agriculture, Trade and Consumer Protection. Stephenson said for the past several years, declining dairy prices have been affecting producers and leading to increasing exits from the industry, a trend he doesn’t expect will end immediately.
“We aren’t going to be able to declare victory and say our farm attrition is done now,” Stephenson said. “We’ve got farms that balance sheets are badly enough damaged that we’ll have to find a graceful exit for them. I think that we’ll have a higher than average attrition rate continuing over the next several years.”
Stephenson said the 2018 Farm Bill’s Dairy Margin Coverage program looks to have especially benefited smaller dairies in 2019, though there are no projected payments for 2020. “That’s the good news, that we probably won’t need those payments,” he said.
Stephenson said milk prices are declining now but that is normal based on the time of year. He said his forecasts for milk prices are optimistic because the possibility of a slow spring flush could lead to decreased production and a drawdown of stocks.
Stephenson said he projected the 2019 All Milk Price would be up by about $2.33 over 2018 and that it could climb another $1.30 in 2020 and hit $20 for the year.
“I personally feel like we may see milk prices rebounding stronger than futures markets are suggesting right now,” Stephenson said. “If we can’t produce as much milk as people are expecting and we continue to drawdown on those stocks a little bit, there’s not going to be enough product left for latecomers to procure for the 2020 big-demand season. That’s when prices will get a lot more lift.”
In recent weeks, contaminated hay has killed 15 horses at a Wisconsin riding stable. The hay, purchased through an agricultural supply business in South Dakota, contained dead blister beetle remains.
Blister beetles produce cantharidin, a toxin deadly to horses when ingested; as few as five to 10 beetles can be fatal for a horse. It irritates the horse’s digestive tract, creating blisters and erosions in the mouth and all the way through the intestines.
“It looked like mild colic,” said Cindy Kanarowski-Peterson, Red Ridge Ranch owner. “The vet cut open two horses and found holes in their stomachs. The vet said it shuts their whole intestinal system down.”
Located near Mauston and co-owned by Kanarowski-Peterson and Lyle Peterson, Red Ridge Ranch is open to visitors to give them ranch-life experiences and other agro-tourism activities. The ranch owners generally make their own hay, but uncooperative weather conditions have resulted in insufficient supply for their more than 100 horses.
“Recent years have become tough to produce the amount of hay we need to feed our horse family, and in addition, the same weather has had a loss of income to our weather dependent business,” said Kanarowski-Peterson. “This fall we purchased hay from out west by the semi load. What we didn’t know was that this hay we have used our savings to purchase was contaminated with blister beetles.”
This has left the ranch owners with a barn full of hay they can’t feed their horses.
“Our entire hay budget is exhausted with this unplanned tragedy and excessive vet bills,” Kanarowski-Peterson said. “We need some help to keep the remaining horse family fed. We are devastated both emotionally with the loss of our loved ones as well as financially.”
Kanarowski-Peterson reported an assistant told her she got a blister on her hand after handling the hay.
Blister beetles are generally found in the southwest and semiarid regions of the Midwest. They get into hay when the adult blister beetles feed on alfalfa flowers and other forage and are then baled with the plants during haying season.
When hay is harvested where the beetles are present, the insects are often killed in the process. However, cantharidin remains potent in hay containing the beetles’ body parts and fluids. Contaminated cured hay does not lose toxicity, nor does the age of hay affect the levels of cantharidin.
When ingested, the toxin can cause colic, diarrhea and a host of other disorders; it can also damage the kidneys and heart.
Conditioning hay, crushing the stalks to promote drying, can increase the amount of the toxin in the hay because it crushes the beetles and releases more cantharidin into the fodder. Harvesting hay without conditioning it might reduce the number of beetles or their parts getting mixed into the hay.
Red Ridge Ranch owners started the stable 20 years ago with 20 acres and 10 horses. Since then, the business has grown to more than 340 acres and 114 horses. Kanarowski-Peterson said in her Facebook post visitors to the ranch have formed special attachments to the horses.
“Our horses are also special to many other people because they have touched their lives and hearts as well as our own,” Kanarowski-Peterson said. “Most of our horses have a story of how they came to live with us and become part of our family. We do the best we can for each and every one of them for the remainder of their lives while sharing them with the public as an operating stable and a plan for kids and adults to learn how to care for and ride horses.”
Hosting about 20,000 visitors every year for guided trail rides, youth camps and other seasonal activities, Red Ridge Ranch receives visitors from Wisconsin as well as Minnesota, Illinois, Iowa and as far away as Florida.
Anyone wanting to help Red Ridge Ranch horses can contribute through the Go Fund Me site set up at https://tinyurl.com/sy5eou8.
Just over a year ago, Representatives Todd Novak, R-Dodgeville, and Travis Tranel, R-Cuba City, had just reviewed the initial results from the Southwest Wisconsin Groundwater and Geological Study. While they were quick to acknowledge the results were just a first step in better understanding groundwater and contaminants, they were concerned enough to call on Speaker Robin Vos to create a Speaker’s Task Force on Water Quality to gather information and make recommendations to improve water quality throughout the state.
Vos responded quickly, naming Novak the chair of the 16-member bipartisan committee that was directed to travel the state and conduct hearings, listening to the concerns of citizens and compiling possible solutions for a variety of water quality challenges facing communities in every corner of Wisconsin. Fourteen hearings were held, with the task force releasing their final report and recommendations to the public on Jan. 8.
“While there is no one silver bullet that will solve all of our state’s water quality issues at once, we are pleased to recommend a strong bipartisan package of legislation that addresses many of the top concerns that we heard about at our hearings around the state,” Novak said.
The legislative package includes a $10 million investment from the state for the support of 13 recommendations — from a new Office of Water Quality and the hiring of a state hydrogeologist to increased funding for county conservation staff and assistance to farmers interested in trying out different conservation practices.
Concerns regarding nitrate contamination, particularly for those with private wells, was a recurring theme at the hearings, the report said. Novak echoed those concerns, citing high nitrates as one of the reasons he and Tranel called for the assembly of a task force.
Two of the 13 recommendations directly address nitrates — the first recommendation includes revising the already established Well Compensation Grant Program to better address nitrate contamination and help those who need immediate assistance with contamination; the second recommendation includes appropriation of $1 million in fiscal year 2020-21 for a nitrogen optimization pilot program in which the Wisconsin Department of Agriculture, Trade and Consumer Protection would award grants of up to $50,000 to agricultural producers to implement a project that reduces nitrogen loading or uses nitrogen at an optimal rate while protecting water quality.
“The goal with this program is to reduce nitrates and allow farmers to come up with ideas,” Novak said. “This came out of the hearings from farmers in some areas that have reduced nitrate levels and kind of want to expand that. Farmers in each area of the state want to experiment, do things and see how it works.”
The committee also heard from farmers about the successes and challenges in implementing conservation practices at the local level, which prompted a recommendation to provide several provisions regarding managed grazing, Alliance for Water Stewardship program certification, cover crop insurance rebates and the producer-led watershed grant program.
“As we’ve heard, managed grazing really works,” Novak said. “This (bill) would create a position to coordinate and work with farmers to come up with managed grazing plans and be a resource for them.”
The recommendation also directs DATCP to administer a new program that would provide grants to reimburse costs incurred by an agricultural producer to apply for a certification of water stewardship from the Alliance of Water Stewardship. Miltrim Farms, Inc., in Marathon County recently became the first farm in the U.S. to achieve a water stewardship certification from the organization after completing an almost two year process, with Novak adding that the certification is just another opportunity for farmers to show their conservation ethic to the public.
The committee also heard at the hearings about the environmental and economic advantages of utilizing cover crops, building into their recommendation a bill that authorizes DATCP to administer another program to provide rebates of $5 per acre for crop insurance premiums paid for acres planted with a cover crop. This program would be modeled after a successful state program implemented in Iowa.
It was also recommended that funding be increased for producer-led watershed protection grants, which are authorized by DATCP. Increasing the funding for this program would allow every producer-led watershed group that applies for grant funding to receive it; the recommendation also aims to connect the watershed groups by rewarding groups that operate in adjacent watersheds.
Another recommendation acknowledges the importance of county conservation staff, with the committee asking that the state fully fund county conservation staff at $12.4 million. The state already funds one county conservation position and portions of the salaries for a second and third conservation position; however, one of the most frequently heard suggestions at public hearings was to increase state funding for county land and water conservation staff.
“This is really important because the county conservation agents are the boots on the ground,” Novak said. “They’re the ones that work with the farmers, they’re the ones identifying issues and they are the go-to person for farmers and others so we really need those positions and those people on the ground.”
Having adequate information and science on Wisconsin groundwater is also important to the committee, as is sharing that information through outreach. Two of the 13 recommendations touch on just that: the creation of a new Office of Water Policy and the hiring of a hydrogeologist and creation of a grant program to support well testing and educational outreach.
“The SWIGG study went very well, I thought,” Novak said. “My goal is to have every county have data — we need data. And there are other counties that have reached out to us and want to do similar studies but can’t afford it, so this would be a matching grant that would help them.
“We want people to get their wells tested. We need more data. We need professional people out there talking to people, and you can tell from the package, that’s what we’re trying to do.”
Another aspect of that includes training tomorrow’s water experts, with another recommendation aiming to create the first ever undergraduate degree for water in the nation. It’s something universities in the state have been thinking about for awhile, Novak said, and the bill attached to this recommendation would help them in establishing that new degree.
“The more people we have with graduate degrees in water, the better,” he said. “There are many people interested in going to school to understand water. And everyone wants clean drinking water. It’s really been on the radar for the last few years, and I think it’s important for people who want to get into the study of water to allow them.”
Other recommendations in the report included expanding the “clean sweep” program to include collection of certain firefighting foams that contain per- and polyfluoroalkyl substances, also known as PFAS; and revising eligibility requirements for the Wisconsin Fund for Septic Systems and delaying the sunset for the fund until June 30, 2023. The program, which provides grants for a portion of the costs to repair, rehabilitate or replace failing septic systems installed before July 1, 1978, was set to expire on June 30, 2021.
“It’s all a big puzzle, and this is just a piece,” Novak said.
Sustainable funding for water quality initiatives is another piece of the puzzle, with Novak suggesting that a water fund be established where money is available for water programs and water related needs, instead of worrying about funding on a two-year budget cycle. Neighboring Minnesota has in place an amendment that provides three-eighths of one percent state sales tax over a 25-year period to fund certain types of projects in the state, including water quality projects, but Novak said Wisconsin legislators “don’t have the appetite” to raise the sales tax for water.
“Water quality is a priority, and the $10 million is just a starting point and we’re going to build off of this every session afterwards,” he said. “It’s going to take some time. Water issues didn’t develop overnight and we’re not going to solve them overnight, so we’ve got to build off of everything and keep going.
“This is just a start, and you’ll see more money going into water with each budget going forward.”
The complete report and recommendations are available online at waterqualitywi.com.