Despite strong demand for basic foods like dairy products amid the coronavirus pandemic, the milk supply chain is experiencing disruptions that are preventing farmers from getting their products to market, reported St. Louis Post-Dispatch (April 3).
As a result, members of the U.S.’s largest dairy co-op, Dairy Farmers of America, have started dumping milk. Other cooperatives, including Land O’Lakes and Foremost Farms USA, warned members they may soon need to follow suit. Foremost Farms told members to consider extra culling.
The dairy business got hit particularly hard, and earlier, because products are highly perishable. The dumping comes even as consumer demand for dairy has gone up. Retail purchases of milk rose nearly 53% for the week ended March 21, while butter sales surged over 127%, and cheese more than 84%, compared to the same period a year earlier, according to Nielsen.
U.S. cheese output totaled about 1 billion-lbs. in February, up 3.7% from Feb. 2019, according to USDA. Production included 449 million-lbs. of Italian type cheese and 415 million-lbs. of American type cheese. Butter production increased 8.9% to 179 million-lbs. year-over-year.
The circumstances are driven by problems in the supply chain, ranging from lower foodservice demand to the lack of truck drivers. Mass closures of restaurants and schools forced a sudden shift from wholesale foodservice markets to retail grocery stores, causing logistical and packing issues for facilities processing milk, butter, and cheese.
Trucking companies that haul dairy products are losing workers due to fears over the virus. Dean Foods Co., which started some plant shifts earlier and running later, is offering $1,000 sign-on bonuses for drivers with dairy experience as it struggles to fill 74 open positions, a company spokeswoman said.
In Wisconsin, dairy farmers are asking USDA to purchase milk and other dairy products as customers in the market are disappearing, reported Milwaukee Journal Sentinel (April 2). Wisconsin Cheese Makers Association, Edge Dairy Farmer Cooperative, Dairy Business Association, Cooperative Network, Wisconsin Farm Bureau Federation, Professional Dairy Producers of Wisconsin, and Wisconsin Farmers Union argued foodservice and institutional customers are no longer buying dairy products due to stay-at-home orders, and the circumstances are beyond their control.
The groups are also asking the USDA to look for ways to “make farmers whole” for milk that’s produced but needs to be dumped, or for which they’ve received drastically reduced payments. More farms are likely to experience milk dumping in the coming weeks.
“The disposal of milk, which we hoped to avoid, has begun, and that is very troubling,” said Daniel Smith, president and CEO of Cooperative Network.
Additionally, the American Farm Bureau Federation and 30 other agricultural organizations wrote the Small Business Administration objecting to a prohibition on the application form for Economic Injury Disaster Loans barring farms and most other agricultural businesses from participating, reported Bloomberg (April 2).
The group noted farmers and ranchers already experienced a 24% decline in net farm income before the virus from highs experienced six years ago.
