A Producer Perspective on Dairy Industry Trends 2019 Wis. Ag Outlook ForumRenk Agribusiness InstituteCollege of Agricultural & Life Sciences Pete Kappelman Meadow Brook Dairy Farms, LLC Manitowoc, Wisc
Bethany and Greg GierkeKenny and Lucy Pete and Shellie Kappelman Erin & A.J. Kenneke Claire Mitch Kappelman • 450 Reg. Holstein and Brown Swiss • All calf and heifer raising • 1100 Cropping acres • Forage and Grain Production
1985 CALS Grad (Dairy Sci) • Land O’ Lakes Board • National Milk Prod. Fed. Board • Testimony to Congress, Int. Trade Comm., DOJ • Ag Policy Advisory Comm. • USDA & USTR • USDEC • DMI • PDPW
Economic Impact of Price Cycle Swings for a 450 Cow Herd x = $15.31 x = $19.04 x = $15.36 Approx.14 Million lbs/yr The accumulated difference between 2011-2014 and 2015-2018 = More than $2,000,000
(A disposition that predetermines a person's responses to a situation.) Impacts to the Producer Mindset* Morale is low and stress levels are high. Frustration and anxiety entering the 5th year of what we view (traditionally) as a low price period. Current attitudes of low self-esteem and doubt regarding their skills and management abilities. In some cases there are feelings of guilt, shame, depression and desperation.
Assumptions for the Continuation/Acceleration of Change Technology will be applied to dairy farming practices at an increasing rate (monitors, sensors, etc. that allow artificial intelligence to facilitate robotic control and automation) Economies of scale will continue Price cycles of consolidating commodity industries get longer and deeper. Much of “dairy” will remain a commodity and still cycle. Consumer preference, buying practices and perceptions of food production methods will continue to evolve Trends in labor availability and cost
What We Cannot Predict… Proliferation of populism and national sovereignty Will the U.S. be allowed to be a low-cost global dairy exporter? Tariffs, Direct payments, Green payments, SPS barriers, Geographical Indications, etc. Will consumers grow to learn and embrace the science of improved plant breeding and sustainability? 82% of Americans support mandatory labelling of foods produced with genetic engineering. 80% of Americans support mandatory labelling of foods containing DNA. J. Lusk, Oklahoma State Univ., 2015 Food Demand Survey
What We Know About the Future… Business will be… business, as usual Cost structure – Don’t need to win the race to 100,000 cows Balance sheet strength / Debt level 9 Billionish A growing number of consumers are demanding “farmer intimacy” and through the use of technology will get it (Niche marketing, small artisanal cheese factory, farmer owned… and marketed co-ops)