022419-wsj-biz-farm-bankruptcies (copy)

For the third year in a row, the state has had the highest rate of farm foreclosures in the nation, many of them dairy farms.

Last night, a dairy farmer somberly told me about three more dairy farms that had recently been forced to put their cows up for sale in his community.

We are at a striking moment in Wisconsin’s history. For most of the past century, our identity has been tied to being the Dairy State. Even today, the state’s dairy industry brings $44 billion directly into the state’s economy.

Interestingly, last Friday marked the last day for public comments on Wisconsin’s Livestock Siting Rule, ATCP 51, which was enacted in 2006 to create a uniform system for large and expanding dairy and livestock farms. By law, the rule and underlying law are supposed to be revisited every four years, but this is the first chance the public has had to weigh in. This summer, Wisconsin’s Department of Agriculture, Trade and Consumer Protection held several hearings and provided other ways for the public to comment.

Many things were said about the proposed revisions to the rule. That they proposed a more sensible, if imperfect, approach to managing farm odor problems, including through more appropriate setbacks from the property line. That the revisions recognize the obvious need to bring the rule into sync with changes in state and federal water quality standards since 2006. That they need to provide more clarity for local governments about circumstances when localities can create more stringent requirements of permit-seeking farms than state standards provide. Since the rule only allows such stringency from localities when faced with concerns about public health and safety, it’s important to understand what constitutes such a public health and safety concern and what doesn’t; few localities have enough resources to obtain unchallengeable scientific studies about their concerns or enough to pursue those questions legally. Stakeholders commented on manure-spreading capacity, costs to localities of considering permits and many other concerns.

One thing that didn’t get much attention in the public hearings was the underlying assumption that the state benefits from increased milk production generated by large dairy operations. Perhaps cheesemakers and consumers do benefit from lower prices for milk and milk products, but the dairy industry as a whole has suffered. Thousands of dairy farmers have been forced out of business since 2006, because they no longer make money.

There are many reasons that 700 Wisconsin dairy farms went out of business last year, ranging from changing consumer tastes to trade war economics. But ultimately, their input costs exceeded the price they got for their milk. And that is especially influenced by the large oversupply of milk.

In Wisconsin, former Gov. Scott Walker provided incentives in 2012 to increase the state’s output of milk. Farmers responded, and by 2016, the state produced 30 billion pounds of milk each year. That milk contributed to the national over-supply that dropped milk prices down to $15 per hundredweight and less, when dairy farmers’ costs are $5 to $7 per hundredweight more.

Someone will certainly protest that the questions around livestock siting shouldn’t engage economics, that the state shouldn’t pick winners and losers. I just ask for honest recognition that we already did. Did we intend to?

Margaret Krome of Madison writes a semimonthly column for The Capital Times. She is policy program director for the Michael Fields Agricultural Institute.

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