An improvement in milk prices and other economic signals has brought renewed optimism for the dairy industry in 2020. “I think we’ve had a difficult time maybe experiencing optimism in the industry, but prices are more than a dollar higher today than they were the same time of year last year,” said Mark Stephenson, dairy policy analyst, University of Wisconsin. Stephenson said he believes the U.S. dairy industry is on the backside of those economic challenges. Domestic demand for dairy products is also strong. “A report recently from the Economic Research Service showed that we have a higher per capita consumption of all dairy products that we’ve had since 1965, so that’s a good thing.”
 
Farm assets are one driver in a tough economy
    Farmers are starting to meet with their bankers as the end of the year approaches. “Currently, the farm economy remains soft,” said American Farm Bureau Federation economist Veronica Nigh. Just this year alone, farm bankruptcies were up 24% compared to the same time frame in 2018. “I get asked a lot ‘Are we back in the 1980s?’ For comparison, during the 1980s farm crisis there were 4,800 farms closing per year. Last year we lost 480 due to bankruptcies.” Nigh adds one underlying driver is farm assets. The total value of land, buildings and equipment is significantly higher compared to the 1980s.

A turnaround year for the dairy industry
    USDA is reporting net farm income will total $92.5 billion this year. Direct government payments and crop insurance benefits represent more than 30% of that total. Most commodities will see increased earnings this year. One of the biggest increases is with the dairy industry with average net income projected to be up 47% from 2018. The improvement in milk prices was cited as a consideration.

Trade deal depends on tariff cuts
    The Chinese newspaper, Global Times, is reporting there will not be a trade deal with the United States unless the United States’ tariffs are cut first. This news story quotes a former Chinese commerce minister, saying China will purchase U.S. farm products, but the amount must be based on market demand. The two sides were reportedly very close to finalizing a trade deal at the end of November, but that momentum stalled when President Trump signed legislation supporting Hong Kong protesters. China’s foreign ministry said that is a serious interference in an internal issue.

Making capital available to ag businesses
    Wisconsin Governor Tony Evers has signed legislation providing access to capital for rural business owners. The pilot project takes funds from the Wisconsin Housing and Economic Development Authority’s Agribusiness Guarantee Program. This program will guarantee up to 25% of a loan or $750,000, whichever is less.

NMPF seeks support on labor bill
    Farm labor legislation has been approved by the House Judiciary Committee and is on its way to the floor. The National Milk Producers Federation said this bill would reform the guest-worker visa program to allow year-round agriculture to participate. That is described as a crucial need for the dairy industry. NMPF is asking dairy farmers to contact lawmakers and ask for support of the bill.

Labeling issue addressed in FDA confirmation hearing
    Wisconsin Senator Tammy Baldwin pressed FDA Commissioner nominee Dr. Stephen Hahn on food labeling issues during his confirmation hearing. Baldwin quizzed Hahn, asking if the FDA would begin enforcing its own labeling standards. Hahn said he supports “clear, transparent and understandable labeling for the American people.” The National Milk Producers Federation praised Baldwin for her advocacy on labeling integrity, especially with the labeling of plant-based dairy imitation products.

Online cheese sales surge
    Online cheese sales are seeing massive growth. The 2019 sales are expected to top $440 million. That represents a 54% annual growth in online sales over the past four years. According to Dairy Farmers of Wisconsin, cheese is a trending food preference. The Christmas holiday is a peak season for cheese sales.

Conservation grant funds awarded
    Wisconsin’s Department of Agriculture, Trade and Consumer Protection has awarded 27 producer-led watershed protection grants. Grants range from $7,500 to $40,000 for conservation practice incentives, education and outreach and water quality testing and monitoring. This is the fifth round of grant awards since the program began in the 2015-2017 budget.

Deere releases quarterly financials
    Deere and Company is reporting fiscal year 2019 fourth quarter earnings of $722 million on gross income of $9.9 billion. That is down 8% from the fourth quarter of 2018. Fiscal year 2019 full year net income is reported at $3.3 billion, a 5% increase year-over-year. Net sales of equipment operations for the year are reported at $35 billion, also up 5% year-over-year. Net sales for Deere’s Agriculture and Turf division is up 2% to $23.7 billion.

RCI takes over Ag-Bag
    RCI Engineering has bought the operating assets of Ag-Bag. Business operations for Ag-Bag will be relocated to the RCI facilities in Mayville. The company products will now be marketed with the name Ag-Bag by RCI.

Land O’Lakes hires Daniels
    Michael Daniels is the new director of federal government and industry relations for Land O’Lakes. Most recently, Daniels held a similar position with NTCA-The Rural Broadband Association.

Ag in the Classroom Award
    The Wisconsin Farm Bureau’s Ag in the Classroom program has recognized Cindy Barber with its outstanding teacher award. Barber is a middle school teacher at Random Lake. Barber’s students hosted a farmers’ market at their school.

WI 4-H wins national competition
    Wisconsin won the North American Invitational 4-H Dairy Quiz Bowl. The team members are Katherine Elwood, Courtney Glenna, Grace Haase and Courtney Stream.

Trivia challenge
    In the United States, butter must include 80% butterfat. That answers our last trivia question. For this week, how much butterfat is required in European butter? We’ll have the answer in the next edition of Dairy Star.
    Don Wick is owner/broadcaster for the Red River Farm Network, based in Grand Forks, North Dakota. Wick has been recognized as the National Farm Broadcaster of the Year and served as president of the National Association of Farm Broadcasting. Don and his wife, Kolleen, have two adult sons, Tony and Sam, and five grandchildren, Aiden, Piper, Adrienne, Aurora and Sterling.