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Wisconsin dairy farmers are struggling to stay afloat

As Americans consume less milk and turmoil in international markets challenges the country's dairy industry, many dairy farmers are struggling to stay afloat. In 2018, more than 2,700 dairy farms in the U.S. went out of business, with nearly a third of those closures taking place in Wisconsin, long known as "America's Dairyland." NewsHour Weekend's Hari Sreenivasan reports.

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  • Hari Sreenivasan:

    Last year, more than 2,700 dairy farms went out of business in the U.S., the bulk of them here in Wisconsin, long known as America's Dairyland. We visited Clark County, where dairy cows outnumber people nearly two to one, to find out why dairy farms are closing and their impact on the entire community.

  • Hari Sreenivasan:

    Jim Briggs is in his dairy barn by 5:30 every morning.

  • Jim Briggs:

    Somebody has to be here seven days a week. The cows don't take a day off, they don't care if you're sick or need a vacation or want a day away.

  • Hari Sreenivasan:

    365 days a year, either Jim, his wife, Jenny, or their 16-year-old son Justin are milking these 60 cows twice a day in central Wisconsin.

    That means, pouring feed and cleaning up what comes after. Sanitizing every teat, wiping it clean and attaching each cow to a pump, which measures how much milk is coming out, as well as the cell health of the cow to make sure it is not sick.

  • Jim Briggs:

    There are nights during the summertime that we might go till 11:00 at night, 1 o'clock in the morning.

  • Hari Sreenivasan:

    That's just a dairy farmer's life. And they don't complain about it.

    What is hard, is trying to keep this way of life a livelihood.

  • Here’s why:

    at its simplest, the costs are going up and the profits, down … because the price Briggs can sell milk for cannot keep up with what it costs him to produce it.

  • Jim Briggs:

    2014 saw record prices and then, you know, '15, '16, '17, '18, it's all been below cost of production prices for the most part.

  • Hari Sreenivasan:

    Milk, like most goods, is subject to the law of supply and demand. Dairy cows in America make more milk than the U.S. consumes, but in early 2014, China and Southeast Asia began buying a lot more milk from U.S. distributors, driving big profits for farmers. But the American dairy industry overestimated how much milk it could sell overseas and increased production too much. As a result, the price farmers like Briggs get for their milk has fallen nearly 40 percent.

    Then there's the cost of making the milk. These silos are full of feed the cows need all day long. An extreme winter and flood-filled spring in the Midwest ruined crops, forcing farmers who normally grow their own alfalfa and hay to buy it. Some have even paid for hay to be trucked in from out of state.

  • Hari Sreenivasan:

    Has it crossed your mind to not keep doing this?

  • Jim Briggs:

    Every day probably at some point in time, you know.

  • Hari Sreenivasan:

    The Briggs farm is hanging on, but according to the U.S. Department of Agriculture, more than 2,700 dairy farms went out of business in 2018 — 691 were in Wisconsin, making up a quarter of all dairy farm closures across the country. So far this year, another 400-plus have gone under.

    Near Dorchester, Wisconsin, is Ken Tesch's 330-cow farm, which has survived since the mid-'80s by growing.

  • Ken Tesch:

    We were at 60 cows for a long time.

  • Hari Sreenivasan:

    Why did you add more?

  • Ken Tesch:

    Economics. It's a vicious circle.

    If your margin was $10 on a cow and now your margin is a dollar, well now they're gonna have 10 times as many cows make the same dollar.

  • Hari Sreenivasan:

    These cows know to walk into this parlor and turn to be milked. The lightning fast hands are those of Jeanie Tesch. She can get through 32 cows in about 8 minutes.

  • Jeanie Tesch:

    Just because we milk a little bit faster doesn't mean we don't take as much time with our cows. We can tell when a cow is sick.

    If they're not feeling well, their ears will feel like ice.

  • Hari Sreenivasan:

    For Ken Tesch, the health of the entire dairy industry depends on what he says is a discussion the nation is not having: whether the trend of smaller farms disappearing and larger farms growing is best for our country.

  • Ken Tesch:

    Are we going to have just continual consolidation? And in 20 years, are we going to have strategically located large dairies around large metropolitan areas to produce milk for that consumer or are we going to have a national food policy that says we're going to have our farms scattered throughout the United States, from Maine to California? From a strategical food safety, having lots of farms all around, we don't have all our eggs in one basket.

  • Hari Sreenivasan:

    If size matters for survival, the Heeg brothers' dairy should have a very good chance.

  • Jay Heeg:

    So currently we're at 1,125 cows. When we started at this location, we started with 625.

  • Hari Sreenivasan:

    And new calves are born every season. Near Colby, Wisconsin, home of the famous Colby cheese, the Heegs' farm runs around the clock. They milk each cow three times a day. Jay Heeg is the dairy manager.

  • Jay Heeg:

    They have sand-bedded stalls, they lay in sand, and today it's a warm day but in here it's nice and cool. We got a controlled environment with fans. Keeping the air moving. We have sprinklers to sprinkle on them, to water them down. And with that air, it cools them off. So it's all about cow comfort.

  • Hari Sreenivasan:

    A happy cow makes more milk.

  • Jay Heeg:

    Happy cow, yep.

  • Hari Sreenivasan:

    Nutritionists even balance the cows' diets to maximize milk production.

  • Jay Heeg:

    So on a daily basis, she's at about 95 pounds of milk per day per cow.

  • Hari Sreenivasan:

    Heeg gets 30 percent more milk per cow today than he did 20 years ago, and he's not alone. According to the USDA, because of improvement in so-called cow comfort and breeding methods, average milk production per cow has more than doubled from less than 10,000 pounds in 1970 to over 23,000 pounds today. Jay Heeg's cows average 30,000 pounds of milk a year.

  • Hari Sreenivasan:

    A free marketer will say, hey, you know what, this is just how markets work, why don't you just decrease the supply and the price will go up?

  • Jay Heeg:

    If we started dropping production, that means less income — so we better bump up supply otherwise you're not in business any longer.

  • Hari Sreenivasan:

    It seems that the cycle rewards having more cows that produce more milk that then more cows and produce more milk right?

  • Jay Heeg:

    That's the system that we're set up in currently. Yeah, it is exactly. So if there's inflation, we have to increase production, because that's one of the few things that we can control, yeah. And that creates more supply.

  • Hari Sreenivasan:

    And if the low milk prices weren't hurting enough, many dairy farmers say they've also been hurt by the Trump Administration's trade wars.

    Last year, the U.S. imposed new tariffs on Chinese goods coming to America, and China responded in kind by slapping tariffs on American products. The latest: China is raising the rate on American cheesemakers from 25 percent to 37 percent to export their product.

  • Hari Sreenivasan:

    Considering that you guys are on the kind of business end of all the policy stuff that happens in Washington, how does this influence the way you think?

  • Jay Heeg:

    So yeah these policies and anything that happens, I mean, affects markets and it affects us right out here. It's real.

  • Hari Sreenivasan:

    I mean, if you could tell your members of Congress something, what would it be?

  • Jay Heeg:

    You know, they need to work on these tariffs.

  • Hari Sreenivasan:

    Because for you this is day to day. You have to deal with this stuff.

  • Jay Heeg:

    We're here. We're here. 24/7.

  • Hari Sreenivasan:

    Ken Tesch knows the trade war with China is not helping, but says he thinks it's for the best.

  • Ken Tesch:

    I am 100 percent behind Mr. Trump. And I'll tell you why: we cannot have policies that constantly allow everybody else to dump their products into the United States, so we need to have equitable trades.

  • Hari Sreenivasan:

    Tesch says he believes President Trump is negotiating a better deal for America, which will help farmers in the long run.

    Until that day comes, dairy farmers will have to ride out the storm and the unpredictable milk prices that come with it.

  • Jim Briggs:

    You know it does, it does wear on you emotionally, physically. When day after day you're essentially going to work, we don't really ever know what we're gonna be paid till we get the check in the mailbox.

  • Hari Sreenivasan:

    How does the culture in this area change if there's nobody like you around and the only farms have hundreds or thousands of cows?

  • Jim Briggs:

    Well, I mean, every one of us small farms, we're going to town, we're buying supplies, we're buying fuel, we're buying food, we may go out to eat. That's all money going back into the local economy.

  • Hari Sreenivasan:

    The ripple effects are already visible.

  • Hari Sreenivasan:

    You've seen better times.

  • Sheila Nyberg:

    Oh yes. Yes, we have.

  • Hari Sreenivasan:

    Sheila Nyberg helps sell Clark County. She's the Economic Development Director. She drove me around so I could see the changes.

  • Sheila Nyberg:

    Agriculture is a big business here.

  • Sheila Nyberg:

    When you look up and down the avenues as we are and going through the towns, we're all threaded together, whether it be the tire company or the tractor sales, the cattle barns, the production of some of the products like you see in the field here are made here, farming equipment.

  • Hari Sreenivasan:

    She took us to Meyer Manufacturing. They make farm equipment, and farmers aren't buying as usual.

  • Hari Sreenivasan:

    When they tighten their belts they don't buy new things like this?

  • Chad Meyer:

    They don't buy new things. They'll fix stuff.

  • Hari Sreenivasan:

    How much of a difference is that?

  • Chad Meyer:

    Very significant. I mean, it can be a huge amount of our business.

  • Hari Sreenivasan:

    Next stop, the town of Loyal, Wisconsin, …

  • Roger Zvolena:

    That one there, they had a fire and we rebuilt that whole top part.

  • Hari Sreenivasan:

    … where Roger Zvolena, his son and 10 employees have been building barns for dairy farmers for almost 20 years. Less so recently.

  • Hari Sreenivasan:

    Are you losing money … breaking even … better off?

  • Roger Zvolena:

    We're way less, drastically. I don't know if it's 50 percent less gross sales, but it's at least 40 percent less.

  • Hari Sreenivasan:

    Wow.

  • Roger Zvolena:

    You know, I don't want to give off the numbers, but millions of dollars of business we used to do. It's been way, way less.

  • Hari Sreenivasan:

    And there are longer term changes, says former mayor of Loyal Dave Williams.

  • Dave Williams:

    You lose your families, the schools lose the kids that are going to schools, all of the school population in town is dropping. A lot of the smaller schools are going into like eight-man football because they don't have enough guys to fill an 11-man team and have any kind of spares.

  • Hari Sreenivasan:

    Which, to him, signals a different future.

  • Hari Sreenivasan:

    Do you think there's going to be more people here or less if the farm consolidation continues?

  • Dave Williams:

    I think we'll be really lucky if we could stay where we're at now. It's not a good trend. Once that population drops, everything else drops with it.

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