Dairy farmers strapped for cash and in some cases about to lose their businesses over a trade dispute with Canada could apply for loan guarantees from a state agency, Gov. Scott Walker announced on April 25. “This is a difficult time for many of Wisconsin’s dairy farm families due to Canada’s trade policies, and we’re going to do everything we can to help them,” Walker said in a statement.
The Wisconsin Housing and Economic Development Authority is offering dairy farmers and processors better terms on loan guarantees from now until August, following a meeting last week between the Wisconsin Department of Agriculture, Trade and Consumer Protection and several agricultural bankers.
“It’s a way of enhancing their working capital and it’s a better way to get (dairy farmers) through a cash-flow situation when they’re running short on working capital,” said Dan Smith, administrator for agricultural development at DATCP.
It’s not a long-term solution, but the move gives the state’s dairy processors a low-cost financial resource to help them invest in additional storage, which would allow them to process more milk, Smith said.
“(Processors) have a need for working capital to help them manage costs for storage, distribution and inventory control,” he said. “What we’ve noticed as we’ve been working through this problem is that (milk) inventory is full and we need a way to encourage processors to take on more milk.”
The changes to the WHEDA program boost loan guarantees to 80 percent up to $200,000 for eligible dairy farmers, while qualified processors can access an 80 percent loan guarantee up to $750,000.
State Senate Majority Leader Scott Fitzgerald (R-Juneau) said he hopes the changes will encourage processors to make investments to accommodate more milk. But they're no immediate help to farmers who will have nowhere to send their milk starting Monday as the result of being dropped by Grassland Dairy Products -- a Greenwood company that said it recently lost its Canadian business when Canada changed its dairy pricing policies.
Some of those farmers have said they’ll have no choice but to sell their cows and shut down if they don’t find new buyers for their milk very soon.
Farms in New York and Minnesota have also been swept up in the crisis.
WHEDA has offered small-business loan guarantees since 1983, helping business owners gain access to low-cost capital.