As dairy crisis crushes farmers, Wisconsin's rural identity in jeopardy

Kyle Kurt fought to keep his emotions just below the surface as he talked about selling off his herd of Holstein dairy cows, which he's milked twice a day, 365 days a year, through good times and bad.

Dairy farming has been Kurt's livelihood, and his passion, since he graduated from Lodi High School 18 years ago. But come Monday, he's having an auction to sell his cows, his milking equipment, his tractors and other farm machinery that he's spent years acquiring.

“It’s probably the toughest decision I have ever had to make,” Kurt said, "but I have been told it's going to be a big weight lifted off my back."

Scores of Wisconsin farmers are in a similar predicament. And with them, a way of life that has defined much of the state for more than a century and a half is disintegrating.

With collapsed prices of milk, grain and other commodities, farmers are losing money no matter how many 16-hour days they put in milking cows, caring for livestock, and planting and harvesting crops.

“It's pretty tough waking up every morning, going to the barn, and not being able to pay your bills, especially when you're putting in that many hours," Kurt said. "Something's got to change or the small farms are going to be gone."

Entire communities are falling apart as small farms go under, said John Peck, executive director of Family Farm Defenders, a Madison based advocacy group.

Grain mills, car dealerships and hardware stores suffer. The local tax base erodes. Churches and schools struggle or close.

“The multiplier effect on the rural economy is huge. It’s why you are seeing all these boarded-up small towns,” Peck said.

Wisconsin lost 500 dairy farms in 2017, and about 150 have quit milking cows so far this year, putting the total number of milk-cow herds at around 7,600 — down 20% from five years ago.

"Drive around Wisconsin and you will see empty barns all over," said Elizabeth Schlintz, a dairy farmer from Bangor and a lender with a community bank.

Unless something is done to save small family farms, she said, they will "be a thing of the past within the next few years."

Small dairy farms have been disappearing from the rural landscape for decades, but the problem has been compounded by a sharp decline in farm-milk prices that's now in its third year and has spread across the country.

Farm cooperatives have urged members to think twice about adding more cows to their operations when the marketplace is awash in milk. Some have even offered incentives for members to quit farming altogether.

Federal court data shows the Western District of Wisconsin had the highest number of Chapter 12 farm bankruptcies in the nation in 2017, and that's only a glimpse into the problem since Chapter 12 is a relatively rare tool used in bankruptcies.

Farmers say the downturn is worse than one they experienced in 2009 because it's lasted longer and their costs are higher now. Many dairy operations are drowning in debt; and in some cases, they have a half-million dollars in unpaid bills.

“You need a good year to make up for what you lost,” Kurt said, figuring that he’s used up about $150,000 in his farm equity to weather this downturn.

“It’s at the point where it would be reckless for me to keep going and burn through everything I have worked for the last 18 years,” he added.

Schlintz and others said the stress level for farmers and their families is punishing.

“Farmer suicide numbers are going up now too,” Peck said. “Every time the phone rings I am worried about another farm going bankrupt or someone feeling suicidal.”

Some farmers cover up taking their own life by making it look like a farm accident, said Joel Greeno, president of Family Farm Defenders and a farmer near Kendall in southwest Wisconsin.

“These guys start thinking they're worth more dead than alive, so their families can collect the insurance,” he said.

Legal wrangling

Bruce Drinkman of Glenwood City has been down the road that Kurt wants to avoid, a troubled path that involved bankruptcy and a lot of personal pain.

Drinkman’s farm, named Desperation Acres, was foreclosed on a few days before Christmas in 2010.

He and his wife, Mari, used her retirement fund to pay off some loans and keep their organic dairy operation of 55 milk cows afloat for a while — but it wasn’t enough.

After nearly three years of legal wrangling in bankruptcy court, clinging to the hope of getting a fresh start, they gave up.

“If you don’t have a good attorney, you are asking for a boatload of trouble,” Drinkman said about fighting to save a farm through the court system.

"You can really get screwed over."

He had purchased Desperation Acres from his father, who purchased it from his father. Bruce and Mari raised five children on the farm, which had 140 acres of fresh, verdant pasture for the cows.

At times, their milk price was sufficient to carve out a decent living in the hill country west of Eau Claire. But there were hard times, Drinkman said, including an especially bad downturn in the 1980s.

"And what’s going on now is making that time look good,” he said.

As they struggled to keep their farm going, Mari battled leukemia and Bruce got a serious shoulder injury that sidelined him from some of the heavy, physical work.

The couple eventually sold their cows, and Mari died last Christmas Eve at age 59.

Last fall, Bruce worked on another dairy farm for a while. But he quit after the farm owner complained about him taking three weeks off to care for his critically ill wife.

“I just walked away,” he said.

A lot of small farms in his area are gone now, Drinkman said, wiped out by round after round of low commodity prices, rising costs and the children of farmers not wanting to follow in their parents' footsteps.

"I mean, it's scary," he said.

More debt than ever

Schlintz and her husband, Alex, have a 60-cow dairy operation that they spent a lot of money on in 2015 — adding a barn and upgrading equipment — before the milk price crashed.

If not for their off-the-farm income, she said, they would be in trouble like so many other dairy-farm families.

"The dream of a mom-and-pop dairy, where the mom stays home with the kids, doesn't exist anymore," Schlintz said.

At least one spouse, she said, has to work off the farm to get health insurance.

Often, farmers are land-rich but cash-poor, meaning their property may be worth millions, but their income isn't sufficient to cover all of their expenses and loan payments.

Chapter 12 bankruptcy was created by Congress following the farm crisis of the 1980s, specifically for farms and commercial fishermen. It allows farmers to “cram down” secured debt, such as land mortgages, to a more affordable level.

The debt limit for a Chapter 12 filing is $4,135,150.

“At one time, that was a lot of money for a farmer. But today, in just one generation, there are many farms with more debt than that,” said David Krekeler, a Madison attorney who handles farm bankruptcies.

"The other qualifications for Chapter 12 aren’t that difficult to meet," Krekeler said, and it can pave the way to a fresh start.

"If you weren't an optimist, you wouldn't be a farmer," he said.

Most farmers use other means to sort out their finances, such as selling their livestock but hanging on to their crops.

"I am getting five or 10 calls a day from guys looking to sell," said Cory Bidlingmaier with B&M Auctions in Browntown.

"One farmer, who sold out a week ago, told me that he was making more money from a part-time job milking somebody else's cows than he could milking his own 80 cows," Bidlingmaier said.

Many farmers will fight “tooth and nail” to keep from quitting, said Mike Lochner, an economic specialist with the Wisconsin Farm Center that's part of the state Department of Agriculture, Trade and Consumer Protection.

“But we strongly advise them to preserve what equity they have left,” he said. “At least then they can get a fresh start."

That’s what Kurt plans to do after Monday's auction.

He’s already had multiple job offers, including one on a larger farm, and he plans to keep his hand in agriculture by raising some beef cattle and crops.

"One door closes and, hopefully, another one opens," he said.

Kurt says he will miss milking the cows, and even the long days when he harvested crops in the middle of the night and then milked the cows a couple of hours later at five in the morning.

He wouldn't be quitting if he could make ends meet.

"We are going on three years of this. That's the problem," he said.

He was only 20 years old when, in 2001, he bought a small herd of cows from a farm he had worked on. It was a natural step after he graduated from the University of Wisconsin-Madison’s Farm and Industry Short Course aimed at helping young farmers.

“It’s all I know, really, all I have done my whole life,” he said.

“Most farmers just love doing the work ... but no one should have this much stress. I have been through the wringer the last few years."