Mark Stephenson, Extension Dairy Policy Analyst
Department of Agricultural and Applied Economics
UW-Madison College of Agricultural and Life Sciences
Phone (608) 890-3755
Third audio in a series produced in concert with the Wisconsin Agricultural Outlook Forum Thursday, Jan. 21 on the UW-Madison campus. Registration costs $15.00 and covers both the lunch and the forum. For more information and to register, visit: http://agoutlook.cals.wisc.edu/
3:04 – Total Time
0:17 – Big milk price drop in 2015
0:40 – Started year in good shape
1:09 – Still made money in 2015
1:51 – Federal program little needed
2:25 – Risk management
2:43 – Break in feed prices
2:55 – Lead out
Sevie Kenyon: Taking a look at 2015 Wisconsin dairy business. We’re visiting today with Mark Stephenson, Center for Dairy Profitability, University of Wisconsin-Extension in the College of Agricultural and Life Sciences, and I’m Sevie Kenyon. Mark, what kind of year did Wisconsin dairy farmers have in 2015?
Mark Stephenson: Well it was a big surprise in comparison to the year before, 2014. 2014 was the best milk price year we’ve ever had so dairy farmers were celebrating, 2015 was a big drop in milk price and I would call it, probably, a drop to normalcy.
Sevie Kenyon: Maybe describe that normalcy and how big the change was.
Mark Stephenson: Sure, we had about a seven dollar a hundred weight drop in milk prices. So, you know you can look at that and recognize that, that’s a big drop. But I also think that we need to put that in the context that last year was probably the year of a generation, so in other words, this current generation of dairy producers probably had the best year they ever have had in their generation.
Sevie Kenyon: Translate this into what it means for our dairy farmers here in the state, the change in prices.
Mark Stephenson: Coming out of that really good year, we pre-bought out of inputs, we had pretty good crops that we carried in and adequate supplies that we carried into this year, and so I think the folks cruised along and I know that in talking to a least a number of accountants and other who have been working year end tax preparation for dairy producers this year, some producers are surprised that in fact they’ve got some taxes that they owe, and so they’re having to do a little bit of calculations. And a lot of that is not because this was such a great year it’s just that we carried forward that 2014 really good year.
Sevie Kenyon: It’s like momentum; tell us a little bit about the experience with federal policy during the year.
Mark Stephenson: Well last year was the first year we had the Margin Protection Program, that’s our new Farm Bill policy it’s an insurance like product to run through the Farm Service Agency and you know, although we had this really big drop in milk price it just wasn’t a year that we dropped to levels that were going to provide much in the way of payments. At the highest level of protection you’ve got a small amount of payment last year, so a number of people were a little bit disappointed, I think, that they spent some money on premiums and didn’t get much in the way of payments.
Sevie Kenyon: What does this say about that Margin Protection Program?
Mark Stephenson: I think it says that we’ve got to remember that this is risk management and it’s meant for catastrophic problems. It’s not meant to be used as an investment and thought of in a year that was not a horrible year for us.
Sevie Kenyon: How are dairy producers doing with their input costs?
Mark Stephenson: So even though we’ve had that big drop in milk prices, feed prices have also declined and it’s been an okay year, it’s not been a great year but it’s been a tread water year.
Sevie Kenyon: We’ve been visiting today with Mark Stephenson, Center for Dairy Profitability University of Wisconsin-Extension in the College of Agricultural and Life Sciences, and I’m Sevie Kenyon.