[audio:http://news.cals.wisc.edu/wp-content/uploads/2012/01/ed_jesse_2012_ag_outlook_review.mp3|titles=Ed Jesse 2012 Wisconsin Farm Income Outlook]
Ed Jesse, Professor Emeritus
Department of Agricultural and Applied Economics
UW-Madison College of Agricultural and Life Sciences
Phone (608) 262-6348
Summing up Wisconsin farm income trends
3:12 – Total Time
0:21 – Recap of 2011 Wisconsin farm income
0:51 – How farm income is generated
1:28 – What producers do with the earnings
1:52 – 2012 farm income forecast
2:23 – Farm Bill speculation
3:00 – Lead out
Summing up farm income. We’re visiting today with Ed Jesse, Department of Agricultural and Applied Economics, University of Wisconsin, in the College of Agricultural and Life Sciences, Madison, Wisconsin, and I’m Sevie Kenyon.
Sevie Kenyon: Ed, welcome to our microphone. Can I get you to recap what kind of a year farmers had financially?
Ed Jesse: Well actually, and perhaps surprisingly, for some farmers it was a record year in Wisconsin for net farm income. We’re going to come in at about 2.4 billion dollars, which exceeds the previous record in 2007 by about 50 million dollars. And, we’re 300 million above last year…and our income; our net farm income in 2011 will be three times what it was in the disastrous 2009.
Sevie Kenyon: Ed, where does this income come from?
Ed Jesse: The big factor, since dairy dominates Wisconsin agriculture is milk prices. Milk prices were record high in 2011 on top of about the same level of production, which raised farmer’s milk checks by about 1 billion dollars. The second major factor was grain prices. Corn prices were record high. Soybean prices were record high. Corn returns to Wisconsin farmers go to 1.7 billion dollars, which represents about half of the total value of crops in Wisconsin.
Sevie Kenyon: Ed, how are farmers responding to this information?
Ed Jesse: I think to a large extent, they’re paying off bills. 2009 was an absolutely lousy year. A lot of debt was taken on, a lot of liquid assets were liquidated, and they’re still being repaid. Farmers don’t feel rich because of this record net farm income, because they’re still paying off the bills of two years ago.
Sevie Kenyon: Ed, how does the new year look for farmer’s income?
Ed Jesse: It’s hard to say. The crystal ball is pretty murky right now. We know that milk prices will not hold at their record levels. We know that feed costs are going to be higher, because of higher grain prices expected in 2012. So, the effect on the livestock sector is a little bit uncertain. I think grain farmers will do quite well. But I would expect that our net farm income in 2012 could be down by as much as 5 to 700 million dollars.
Sevie Kenyon: Ed, is there anything new to look forward to in the new year?
Ed Jesse: Well, obviously the 2012 farm bill, if it is passed in 2012, will have a major impact on Wisconsin agriculture. I think we’ll go back to the traditional process of full debate in Congress, or at least in the agricultural committees, and more input from farmers on what to have. I think also we’ll see greater attention to insurance as opposed to subsidies in farm programs, where farmers pay premiums that are subsidized in order to ensure a particular margin or a particular price or a particular income level as opposed to simply receiving direct payments.
Sevie Kenyon: We’ve been visiting with Ed Jesse, emeritus professor, Department of Agricultural and Applied Economics, University of Wisconsin, in the college of Agricultural and Life Sciences, Madison, Wisconsin, and I’m Sevie Kenyon.
Tags: Ed Jesse, farm finances, economic forecast, farm income