Roughly 18% of dairy produced in the U.S. is exported, with Canada, Mexico, and China being the country’s most of those products go to.
The 8.2 billion dollars’ worth of dairy that was exported last year was the second highest on record, but retaliatory tariffs could hurt that industry.
Hans Breitenmoser has about 460 adult cows on his Merrill dairy farm.
The farm produces roughly five semi loads of milk every week, most of which goes to Sartori in Antigo to become high end cheese.
He says as farmer, there’s a lot outside his control like the weather and even the markets themselves because of speculation.
“If public policy creates a situation that makes the things even less certain in an already terribly uncertain environment, then, yeah, you grow gray hair as your main crop, as I have, if it's not falling out in chunks,” said Breitenmoser.
One of the latest uncertainties for Breitenmoser and others in the dairy industry is tariffs.
In response to tariffs by the Trump Administration, some countries have put retaliatory tariffs on U.S. dairy products.
Then some of those were suspended, while the 125% tariff imposed by China and the 25% tariff by Canada are still in place.
Darin Von Ruden is a dairy farmer in southwestern Wisconsin and President of the Wisconsin Farmers Union. He says about 15% of Wisconsin’s dairy products go to Canada.
“They're actually already starting to take less so that's going to mean there's going to be more product here in the US, that will have to either be consumed or builds up the supply,” said Von Ruden. “Anytime that we see a half a percent or 1% too much product here in the United States, it usually has an effect on the prices that farmers are paid.”
During the first Trump Administration when tariffs were placed also placed on dairy products, Breitenmoser said it dropped the milk price causing them to lose money.
In an attempt to help farmers recoup some of those losses, the federal government gave farmers a subsidy.
Breitenmoser says he’d accept it again to “get compensation for taking one for the team.” But he’d rather not have to need them in the first place.
“If you create a policy, a public policy that does negative things to a market, and then you have to turn around and spend taxpayer dollars to try and make it up to those folks who were negatively impacted, I would say that any reasonable person would look back at that and say that didn't work out quite as well as what we had hoped,” said Breitenmoser.
While the short-term impacts may be alleviated if the U.S. can work out a trade agreement with these countries, there’s also long-term implications.
Chuck Nicholson is an associate professor at UW Madison who divides his time between the Department of Animal and Dairy Sciences and the Department of Agricultural and Applied Economics.
He says when dairy cooperatives and other ag commodities venture into a market outside the U.S., it’s a long-term commitment.
“When you disrupt that pattern by kind of throwing this tariff rock into the pond, that disturbs not only the immediate impact of what the price is, is going to affect how much somebody's going to buy, but it kind of loses some trust in the U.S. as sort of some kind of reliable supplier with whom I want to have this ongoing working relationship,” said Nicholson.
Von Ruden says once a market is lost it’s hard to make those gains back.
“If we lose that market in Canada, we might not ever get that back,” he said. “Then you have to go out and find another buyer of your products, which doesn't happen overnight, and sometimes you never find that buyer.”
Nicholson says if dairy producers can’t export their goods, it could lead to high supply in the U.S. which may lead to lower prices on dairy products at grocery stores, but any impact to consumers would be modest compared to the impact on the ag economy.
Nicholson has done some economic modeling on what might happen to the industry if, for example, Canada’s 25% tariff stays in place for a considerable amount of time.
“What we would see, if that's the case, is some pretty considerable decreases in farm income, like a 15 to 50% reduction in the income for a farm that's about the average size in Wisconsin of about 250 cows,” said Nicholson. “The potential for a $1 billion to $2 billion worth of income losses here in the state of Wisconsin, reduction in the value of our sales of export products around the world, that would be fairly significant. So all those things, most people in the industry would say, that's probably not a good outcome for us.”
And as Breitenmoser pointed out, what’s bad for Wisconsin’s dairy industry is bad for Wisconsin’s economy.
“Everybody should be rooting for a healthy dairy industry in the state of Wisconsin, because without it, you know, that has a negative impact on every tavern, every grocery store, every hardware store, every manufacturing. I mean, it just has an impact that's pretty broad,” said Breitenmoser.
In 2023, Wisconsin exported $518 million in dairy products with the largest market being Canada followed by China.
