Steve and Karen Sponem have been dairy farmers most of their adult lives, so they learned a long time ago how to live through the radical ups and downs of milk prices.
Two years ago, the dairy industry was reeling when prices dropped to almost $9 per 100 pounds of milk. Those numbers were brutal for the Sponems, who said they need between $16.50 and $17.25 per hundredweight just to break even at their town of Primrose farm located just a stone’s throw from where Fighting Bob La Follette grew up.
“We’d say, ‘Why get up when you know you’re going to lose money today?’” Steve Sponem added.
It didn’t take too long before the prices went back up. Earlier this year, and despite the struggling global economy, dairy industry experts were giddy when prices improved to almost $21. Steve Sponem said that was the highest he has ever seen.
“We’re used to not having a lot, so when you make a little money, it seems great,” Sponem added.
October’s preliminary price stood at $19.80, according to the U.S. Department of Agriculture.
What the Sponems and all dairy farmers around the globe would prefer is more consistency, preferably on the high side. Paul Zimmerman of the Wisconsin Farm Bureau thinks those days may be coming, particularly for Wisconsin dairy farmers.
“Ag was the last one in the recession and the first one out of it here in Wisconsin,” Zimmerman said. “The world is demanding our products.”
Through September, Wisconsin exported a record $2.1 billion in agricultural products to more than 140 countries, according to the state Department of Agriculture, Trade and Consumer Protection. That’s an increase of 24 percent over January through September 2010.
Agriculture exports experienced double-digit growth to Canada, Mexico, South Korea and China - four of the state’s five top export markets - during that span this year, according to the report. Japan was the only country among the top five that didn’t experience double-digit growth.
“I wish I was young again because I see more opportunities for a dairy producer today than what I’ve seen in my lifetime,” said Bill Bruins, president of the state Farm Bureau and a dairy farmer near Waupun. “The growing export potential is just so exciting to me.”
Michael Marsh, the head of the Western United Dairyman trade group in California, said in an interview with The Associated Press that global demand for American dairy products has been “extraordinary” but global supplies have been “exceptionally tight.”
“From the American dairy farmers’ perspective, you have almost a perfect storm,” Marsh said.
Bruins said 15 percent of the U.S. dairy production was exported in each of the last few years. He added that percentage could double in a few more years, keeping dairy prices high.
“If the markets have confidence in their suppliers, it will bring stability more than anything else to our price,” he said.
In high demand are dairy proteins such as whey and powdered milk products. A state DATCP report shows dairy exports from Wisconsin totaled $168 million last year. Cheese led the way with $75.6 million but whey was a close second at $71.4 million.
Wisconsin is in the best position to export whey because it’s a byproduct of cheese, which is produced here more than any other state. Whey is found in milk chocolates, sports drinks, health foods and animal food.
Despite those strong numbers, production of whey is not keeping up with global demand. But it’s not from a lack of effort from the state’s cheesemakers. “We are beyond what state milk producers can provide,” Bruins said.
Jim Cisler of DATCP agreed and said 4 billion pounds of milk are imported into Wisconsin each year from neighboring states to satisfy cheesemakers. He also said 15 to 20 companies are producing whey products that can be exported. A new plant in Reedsburg called Wisconsin Specialty Protein is owned by Fitchburg’s Tera Johnson.
As strong as the numbers look, exports are a dangerous business because of their fickle nature. A great example is how a border dispute earlier this year involving Mexican truckers got Mexico to impose tariffs that limited U.S. exports to that country. Also, Wisconsin needs to continue to improve its whey production so more potential importers don’t look elsewhere.
DATCP can help businesses market exports of agricultural products.
“The facts are out there,” Bruins said. “Sometimes farmers are the last ones to realize it.”
Like most dairy farmers, the Sponems will roll with the punches the ag business throws. Steve Sponem is in a good position because he took over his farm from his father and one day will turn it over to three of his adult children who already farm with him.
They have 600 head of cattle, including 230 Holsteins they milk. They have quality cows through good breeding practices for the past 30 years. They don’t use bovine growth hormone and they make sure their cows are comfortable.
They also grow all their feed. That’s a staple of the state dairy business that allows it to one-up California, the country’s top milk producer that has seen production stagnate because its farmers must purchase much of their feed.
Steve and Karen have made a strong impression on their children with their business formula.
“We’re very lucky that our kids want to come back. Very lucky,” Karen Sponem said.
The children may get lucky if exports continue to grow and milk prices continue to stabilize. But they’ll be ready if they don’t.
“We’ve always got each other, we’ve got each other to lean on. This is not a job,” Karen Sponem added, “it’s a way of living.”
WISCONSIN’S TOP DAIRY EXPORT PRODUCTS
1. Cheese $75.6 million
2. Whey $71.4million
3. Butter $12.4million
Source: 2010 data; state Department of Agriculture, Trade and Consumer Protection
TOP IMPORTERS OF WISCONSIN WHEY
1. Canada $16.5 million
2. China $11.6 million
3. Malaysia $9.6 million
4. Thailand $5.2 million
5. Vietnam $4.8 million
Source: 2010 data; state Department of Agriculture, Trade and Consumer Protection
TOP IMPORTERS OF WISCONSIN AGRICULTURAL PRODUCTS
1. Canada $904million
2. Mexico $198million
3. Japan $97 million
4. SouthKorea $93million
5. Italy $85 million
6. China $82 million
Source: 2010 data; state Department of Agriculture, Trade and Consumer Protection
TOP IMPORTERS OF WISCONSIN AGRICULTURAL PRODUCTS
1. Canada $904million
2. Mexico $198million
3. Japan $97 million
4. SouthKorea $93million
5. Italy $85 million
6. China $82 million
Source: 2010 data; state Department of Agriculture, Trade and Consumer Protection
