On February 24 the Assembly Committee on Agriculture held a hearing looking at an extension and expansion of the tax credit which is now available for dairy farms to “modernize” and expand.  I couldn’t get to the hearing in person, but I sent the following letter with questions and concerns.

To: Assembly Committee on Agriculture
From: Sarah Lloyd, NelDell Farms, Wisconsin Dells, WI
Date: February 24, 2010
Re: Questions and Concern on Assembly Bill 756 relating to the dairy and livestock investment tax credits

My name is Sarah Lloyd and I am a dairy farmer in Columbia County, just east of Wisconsin Dells.  My husband, Nels Nelson and I milk 300 cows with his brother and family and my in-laws.  I am not able to make it in-person today to the hearing but I hope that you will consider this memo when you are hearing testimony and considering Assembly Bill 756.

From reading the draft of AB756 under consideration, I have understood that you are considering extending and increasing the tax credits available to dairy farmers for the “modernization” and expansion of their operations.

On the face of it I am not opposed to the extension of the tax credit to January 1, 2012 IF an analysis of how the tax credit has been used so far shows that it is being used equally across the diversity of Wisconsin dairy farms, both from a size and a dairy system perspective.

However, I am NOT in favor of extending the availability of the tax credit if analysis shows that this tax credit has primarily gone to facilitate and encourage the expansion of large farms in Wisconsin.

What sort of farms and operations have taken advantage of this tax credit?

I am asking that if the Assembly Committee on Agriculture has not already seen an analysis of how the tax credit has been used, that you do this before making a decision about AB756.

Also I would urge that you do NOT increase the maximum tax credit to $75,000, as currently proposed.   Is it necessary to increase this?  During this time at what is hopefully the end of a long period of low milk prices, what sort of farm is able to spend $750,000 in expansion and modernization?  Does this increase only allow more benefits for large-scale CAFOs?  Currently the maximum tax credit under this program is $50,000.  I would urge you to maintain it at the current level.  This will provide plenty of incentive for farms that want to make improvements, while not further encouraging larger farms.

We do not need more, larger dairy farms in Wisconsin.  Currently our average herd size is around 100 cows.  And we have a good mix of sizes and shapes (confinement herds to rotational grazing herds).  This diversity is vital for the resiliency of our dairy industry, economically.  But the number and diversity of dairy farms is also vital for our rural communities, our schools, our churches, etc.

It seems very common to hear that we have to make sure we have large-CAFOs to maintain milk production volumes to keep our dairy processing industry healthy.  And so we must make available lots of incentives and encouragement, like the tax credits proposed in AB756.  I do not dispute that our dairy processing industry needs to be healthy.  But we can supply this industry with milk in many different ways.

According to figures just released by the USDA Wisconsin produced just over 25 billion pounds of milk in 2009.  And the average Wisconsin cow produced just over 20,000 pounds of milk a year.  So to maintain this 25 billion pounds we need 1,250,000 cows.  Here is an example of the different “ways” we can produce that 25 billion pounds of milk in Wisconsin:

•    12,500 dairy farms with an average herd size of 100 cows (basically what we have now).
•    2,500 dairy farms with an average herd size of 500 cows
•    1,250 dairy farms with an average herd size of 1,000 cows
•    250 dairy farms with an average herd size of 5,000 cows.
There are heavy implications for communities, the economy, people, and the land depending on what scenario Wisconsin chooses to set it sights on.  I urge the Assembly Committee on Agriculture and decision-makers in the state to do what they can to maintain the first scenario and not put all its efforts, money, and resources in creating the 250, 5,000 cow variant.

I appreciate your consideration of my questions and concerns on AB756.

Thank you,

Sarah Lloyd