The combination of record-high milk prices and record-low feed costs are creating profits for some Wisconsin dairy farmers that are six times higher than previous good years, according to dairy experts.
Randy Greenfield, a dairy specialist for Vita Plus, a Madison-based livestock feed company, has calculated annual profits for the state's dairy farmers based on their financial records and conversations with agribusiness consultants. Some farms that milk the state average of 117 cows will see profits totaling more than $200,000, Greenfield said. Those that milk 500 cows will make $1 million, while 2,500-cow dairy farms will clear $5 million, he said.
"Financially, for a lot of farmers, this will be the best year they will ever have," Greenfield said.
Dairy farmers hope this year will allow them to bounce back from 2009, when milk prices collapsed and they were forced to accumulate debt, and prepare for a potentially similar scenario in 2015, the Wisconsin State Journal reported.
"There's going to be a big drop, nobody is trying to whitewash that," said Mark Stephenson, director of dairy policy analysis at University of Wisconsin-Madison.
Although many dairy farmers can expect record profits, most are preparing for the worst because of the projections for next year, farmer John Judd said.
"There are no frivolous spenders among dairy farmers anymore because they all lost their farms," said Judd, who owns a 75-cow dairy farm in Primrose, located in southwest Dane County.
Class III milk prices, which reached an average high of $22.50 to $22.60 per hundredweight this month, are expected to drop to $17.15 to $18.05 by next November due to high milk production and slowed demand because of shrinking export sales, according to a World Agricultural Supply and Demand Estimates report.
But dairy farmers should be able to survive the estimated price drop of 22 percent, according to Greenfield, since feed, fertilizer and fuel costs are expected to decline or at least stay the same.