Consolidation: An Old Trend That’s Here To Stay
Since January 1, more than 400 dairy farms in Wisconsin have gone out of business. It’s a staggering figure and the biggest decline the state has seen since 2013. However, one analyst points out it’s not a new trend and unfortunately, it’s one that will stick around for a while.
“With regard to Wisconsin dairies, there's no question that we've seen a lot of them exit the space and the reality of that is we see dairies leave the space every month, every year, and that's been going on for my entire lifetime. Will that continue? Absolutely,” Mike North told Farm Journal’s MILK at the World Dairy Expo. “It's not a trend that we certainly are excited about. But it's a trend that has been in place for decades, it's a trend that will continue.”
North points out that consolidation in agriculture is not a new trend and as herds continue to consolidate it’s not an experience much different than what’s happening in many other sectors of the industry.
“There'll be continued consolidation, cow herds are going to continue to grow in size as people leave the space and let's remember that this is not just an equal economic question, this is a much bigger issue than that,” he says.
According to North, there are many reasons farms close. Is there a second generation that's willing to return back to the operation that's in existence as it stands today? Do they have the equity to come back to the farm? Do they have the interest to come back to the farm?
Are they exiting because this is this is part of their retirement plan? Is this part of something bigger?
“There are lots of questions as to why people leave the space. Economics certainly play heavily into the conversation, but it's not exclusive,” he says. “So, as we look at farms leaving it will continue to happen. Nobody gets excited about that. But at the same time, it's a reality we've lived with for years and it'll be a reality we live with for years to come.”