But they admit that their crystal ball is cloudy. "There is always uncertainty surrounding any forecast, but there may be more of it in 2013," they write. If drought persists and feed prices remain high, milk production would tighten further. With continued strength in world demand for dairy products, "we could see milk prices exceed our forecasts in the second half of the year," they say.
Among the report's other findings:
- The drought sharply reduced yields of non-irrigated processing vegetables, and high temperatures set back pollination and growth even on irrigated vegetables. But yields of potatoes, most of which are irrigated, were up significantly, thanks to a mild spring that allowed early planting followed by a very warm early summer that spurred rapid tuber growth.
- Apple production was down 60 percent due to a sequence of abnormally warm temperatures in March, which triggered early budding, followed by a hard frost in April. But yields varied. Some growers had exceptional yields and quality; others lost up to 90 percent of the crop. The tart cherry crop was down 90 percent.
- Aggregate net worth strengthened. Assets increased about $4.4 billion while debt was up $700 million. Real estate accounts for three-quarters of farmers' net worth and two-thirds of their debt.
- Relative debt levels changed little. The average debt-to-asset ratio was 13 percent at the end of 2011. That's up from 12 percent five years ago, mostly due to more real estate debt, but it's still a healthy financial position. There's no sign of a repeat of the farm debt crisis of the 1980s, when plunging land values and large real estate debt sent the debt-to-asset ratio above 25 percent.
The Status of Wisconsin Agriculture report is produced by the UW-Madison Department of Agricultural and Applied Economics and the Renk Agribusiness Institute. Copies are available online at http://aae.wisc.edu/pubs/status/.