For dairy farmers in the United States, the timing of the Covid-19 pandemic could hardly be worse.
As the disease caused by the coronavirus SARS-CoV-2 spreads across the US and changes so many aspects of public life, it’s also reshaping how consumers buy dairy products. And while lots of farmers are experiencing increased demand for their foods, experts estimate demand for dairy has evaporated by nearly half.
The US dairy supply generally increases in the spring season, part of the natural cadence at which cows produce milk. But according to a new report by CoBank (pdf), there’s little demand for it this year. Economic weakness led big export markets, including China, to slash the volume of US milk they’re importing. School closings across the US—particularly elementary schools—have also put a major dent in milk consumption.
“The biggest thing is the collapse in the restaurant and food service demand,” says Lucas Fuess, a food industry analyst with HighGround Dairy. “It’s tough to get numbers, but I would estimate as much as 40% of dairy goes into food service channels.”
That’s a significant number, especially considering many US dairies were already largely struggling financially. Farm balance sheets, checking accounts, and cashflow were already in a pretty critical situation going into 2020, Fuess says. Now, with the US expected to skid into a recession, people may be spending less on premium dairy products. The result: “We could see a lot of bankruptcies pretty quickly,” he says.
There are a few ways to visualize the pain dairy farms are feeling. One is by charting out prices on the spot market, a daily auction where buyers and sellers make bids for and trade dairy products. The daily settlements set the prices that companies use when doing business, reflecting how much farmers can get for their goods. Spot market prices of butter and cheese blocks show a clear dip in the last part of March.
Another way to visualize the downturn: actual photos and videos of milk dumping being shared by dairies on Twitter. Farmers who have more milk than they can sell are literally dumping whole milk onto the grounds of their farms because there’s nowhere for it to go.
There are a couple bright spots, the CoBank report points out.
“A stable-to-slowly shrinking cow herd will keep milk production figures in check while the world emerges from a global pandemic,” it states. The number of dairy cows in the US has been decreasing for decades as farmers have found ways to increase the amount of milk individual cows produce. The stability of that downward trend will help farmers plan for future business.“Feed costs are expected to be lower, which will also help dairy farmers weather this uncertain time.”
The question is how many farms will be able to weather the current crisis.
A controversial Eastern Oregon dairy is officially under new ownership, though it will likely be months before state regulators decide if the facility can reopen.
The Oregon Department of Agriculture has approved the transfer of the former Lost Valley Farm in Boardman to Easterday Farms based in Pasco, Wash.
Easterday bought the property for $66.7 million last year.
Lost Valley Farm opened in 2017 and was permitted for up to 30,000 cows, making it the second-largest dairy in Oregon.
However, under previous owner Greg te Velde, Lost Valley almost immediately began violating the conditions of its permit for improperly handling and storing manure.
Te Velde declared bankruptcy in April 2018 amid allegations of persistent drug use and gambling. Later that year, he was stripped of his control over Lost Valley — along with two other dairies in California — and a federal trustee was put in charge.
The trustee, Randy Sugarman, decided to close and sell the dairy but was first responsible for cleaning up the site. On Dec. 30, 2019, ODA issued a “letter of satisfaction” for the cleanup, which included removing all cows, flushing barns and emptying wastewater lagoons.
ODA recently transferred the “zero-animal clean-up permit” to Easterday Farms, though the dairy cannot reopen until the state approves a new Confined Animal Feeding Operation, or CAFO, permit. Easterday Farms has applied for a new CAFO permit, which is under review and expected to go out for public comment this summer.
Oregon’s CAFO program is jointly managed by ODA and the state Department of Environmental Quality.
Easterday Farms Dairy would have up to 28,300 cattle, with 8,000 mature dairy cows and 2,650 heifers housed under roof along with 1,700 mature cows and 5,950 heifers in open confinement. The farm plans to invest $15 million to bring the operation into full environmental compliance.
According to the CAFO application, the dairy will generate roughly 5.4 million cubic feet of liquid manure, 5.9 million cubic feet of solid manure and 11.7 million cubic feet of processed wastewater annually. The nitrogen-rich manure will be stored in lagoons and used for fertilizer on 5,390 acres of surrounding farmland, growing crops such as potatoes, onions and forage for the cows.
A coalition of environmental and animal rights groups has called for Oregon to reject the dairy’s permit and declare a moratorium on “mega-dairies,” citing the failure of Lost Valley Farm.
ODA has attributed problems at Lost Valley to poor management, and would look to Easterday Farms to achieve and maintain CAFO compliance going forward.
Last night, the National Milk Producers Federation, the largest organization of U.S. dairy farmers, and the International Dairy Foods Association submitted a request for assistance to Agriculture Secretary Sonny Perdue. NMPF President and CEO Jim Mulhern offered the following statement:
“As most of the country shelters in place and large swaths of the foodservice sector come to a standstill, dairy sales outside retail channels have plummeted. Market prices have fallen rapidly, creating a crushing economic outlook for producers of nutritious, and necessary, milk and dairy products.
“While no plan can wholly remedy the losses that are occurring, dairy is responding with a united plan that can help mitigate the damage caused to it by the COVID-19 pandemic. After extensive discussions across the industry, we have developed this comprehensive action plan to address many of the key marketplace challenges created by the pandemic and are presenting it to USDA.
“We will engage in discussions with USDA in the coming days to discuss the proposal, urging the department, as we know it will, to move quickly to address the effects of the pandemic on our industry. We also understand the demands being placed on USDA at this time. Nevertheless, after five straight years of poor milk prices that were just starting to improve before the pandemic hit, USDA’s immediate actions here will be critical to help people survive the market devastation that has occurred. We look forward to working closely with USDA as we fight for dairy farmers.”
The National Milk Producers Federation, based in Arlington, VA, develops and carries out policies that advance dairy producers and the cooperatives they own. NMPF’s member cooperatives produce more than two-thirds of U.S. milk, making NMPF dairy’s voice on Capitol Hill and with government agencies. For more, visit www.nmpf.org.
Dairy farms could boost efficiency and returns by taking a lean management approach, the Australian Dairy Conference earlier this year was told.
Jana Hocken, who worked as an engineer with Toyota and a lean management consultant across the globe, was horrified by what she saw on farm when she and her husband took on the management of his family’s 1000-cow operation.
But she realised the same lean management principles she had helped introduce to large businesses could be applied successfully on farms.
“One of the definitions of lean is the relentless pursuit of identifying and eliminating waste in all forms in order to improve business performance and customer satisfaction,” she said.
“If we look at our processes in the eyes of customers … and we define value in the eyes of our customer, then 95 per cent and sometimes more of our processes are non valued-added in the eyes of customers.”
But this created the opportunity.
These processes could be simplified or reduced without having any impact on the customer.
This would not change the milk price or government regulation or any of the other external pressures on the business, but it would help people working in the business do things in a better way.
It would mean fewer resources and less time was needed to do things.
Ms Hocken said waste in a lean management fell into eight categories, that could be represented by the acronym DOWNTIME:
Defect – when things go wrong, fix a fence, milk goes down the drain, cows in the wrong paddock.
Overproduction – for example, stock, feed, so using resources for something not needed.
Waiting – for animals, decisions, supplies.
Not-Utilised people – particularly not listening to people’s ideas that could make processes better.
Transportation – moving stuff around unnecessarily, such as moving a pile of feed or mineral from one place to another.
Inventory – having more of what is needed, for example buying medications that were not needed that expire.
Motion – people moving around when not needed.
Extra processing – doing more than is required to get an outcome.
Ms Hocken said it was vital to establish clear, standardised processes for tasks done on the farm.
The keys were to provide specific directions, use visualisation where possible and ensure people understood the end outcome.
It was also important to create open, transparent workplaces where teams were engaged and empowered and there was two-way discussion, where people could ask questions and receive feedback.
Ms Hocken provided an idea of what this waste could look like on a dairy farm (see Figure 1).
Simplifying processes and setting up the farm in a more logical way could reduce waste in many areas: pasture, feed, effluent, labour, resources used and time.
She gave a specific example of a change implemented on their farm in Teat Seal treatment (see Figure 2).
Under the old system, five staff members did full treatment on individual cows on particular parts of the stationary rotary platform.
Under the lean system, the process was turned into something like an assembly line. The rotary moved at a 20-second intervals and each person was allocated a specific task to do on every cow and the five staff members stood side by side around the platform. One person cleaned the back teats, the next person sealed the back teats, the next person cleaned the front teats, the next person sealed the front teats, and the last person painted the cow red/orange and teat sprayed.
The change cut the time spent from six hours to two hours, reduced the number of Teat Seal tubes used, and reduced the subsequent number of cows with mastitis, halving the cost of antibiotic used on the farm.
“All we did was change the process, some impressive results just by thinking differently about how you do things,” Ms Hocken said.
The change produced a 66pc reduction in time, a 9pc reduction in Teat Seal, a 43pc reduction in mastitis and a 26pc reduction in costs. It also reduced the stress on the animal and the people, which also reduced the amount of effluent and the water needed to clean it up.
“If you do right things the right way, you’ll get right results,” Ms Hocken said. Looking after the environment, animals and land was good for business, it made business sense.
Ms Hocken has written a book, The Lean Dairy Farm, on how she applied these principles on a dairy farm.
On the Chicago Mercantile Exchange milk prices across the board were limit higher in both Class III and Class IV. May Class III milk futures up 75 cents to $12.58. June 75 higher at $13.80. July through September contracts also up 75 cents.
On the commodities Dry whey unchanged at $0.33. Blocks steady at $1.1275. Barrels up $0.01 at $1.10. Butter $0.01 higher at $1.2650. Nonfat dry milk up $0.0375 at $0.90. Three trades were made at $0.90.
New cow-wellness and fertility traits improve predictions for potential lifetime profitability
Dairy producers now have additional trait insights to help predict potential lifetime profitability. Results from CLARIFIDE® Plus genetic testing for Holsteins and Jerseys now include cow-wellness traits for cow respiratory disease and fertility traits for cow abortion, twinning and cystic ovary. Previously available only for Jerseys, Holsteins now have milk fever available among the cow-wellness trait insights. These new trait insights are in addition to cow-wellness traits for mastitis, lameness, metritis, retained placenta, displaced abomasum and ketosis, and calf-wellness traits for calf livability, respiratory disease and scours.
With the availability of more trait insights, Zoetis also has updated the Dairy Wellness Profit Index® (DWP$®), which helps producers predict potential lifetime profit of individual dairy replacements. The latest update incorporates additional traits impacting lifetime profitability, including cow abortion, twinning, cow respiratory disease and cystic ovary.
“We’re helping our customers build a cow for the future,” said Dave Erf, geneticist, U.S. Dairy Technical Services for Zoetis. “That cow needs less interventions, needs to live longer and needs to produce more milk over more lactations; essentially, deliver more ROI and profitability over her lifetime.”
Improved lifetime profitability prediction
The impact of DWP$ has benefits over other ranking methods, such as Net Merit (NM$).
“DWP$ has a three-pronged approach to improving production, fertility and health, simultaneously. NM$ is more focused on production and fertility, with a minor acknowledgment of health traits,” Erf said. Selection index updates and the incorporation of the new fertility and wellness traits into DWP$ also are increasing the accuracy of DWP$ in predicting potential lifetime profitability.
In a study, Zoetis ranked Holstein cows tested with CLARIFIDE Plus with the updated DWP$ from April 2020. There was an additional 1,442-pound difference in lifetime energy corrected milk (ECM) and $141 in lifetime income over feed costs (IOFC) per cow between the best 25% and worst 25% than when we ranked the same cows by DWP$ in 2018. This indicates the latest DWP$ updates have improved the accuracy of predicting lifetime profitability.
DWP$ predictions are a useful tool for dairy producers interested in using genetics as a method to improve their overall herd profitability. Incorporating DWP$ into breeding and culling decisions will help dairy producers create a herd for the future that is capable of higher lifetime profit when combined with best herd management practices. More information is available at www.clarifideplus.com.
Zoetis is the leading animal health company, dedicated to supporting its customers and their businesses. Building on more than 65 years of experience in animal health, Zoetis discovers, develops, manufactures and commercializes medicines, vaccines and diagnostic products, which are complemented by biodevices, genetic tests and precision livestock farming. Zoetis serves veterinarians, livestock producers and people who raise and care for farm and companion animals with sales of its products in more than 100 countries. In 2019, the company generated annual revenue of $6.3 billion with approximately 10,600 employees. For more information, visit www.ZoetisUS.com.
VH Nader at +44 NTM is the new #1 NTM Genomic sire on the April 2020 of the Scandinavian countries (Denmark, Sweden, Finland). In the second spot the German bull Skyboy at +43 NTM. The former #1 VH Yngvar drops two spots to place three at +42 NTM. Gen Bellroy (Boxer) is the #5 NTM genomic bull at +39 NTM. Topping the daughter proven NTM list is VH Manfolk at +35 NTM. In second we find another domestic sire VH Bernell at +33 NTM. The stage is complete with the international American sire All-Star at place 3 at +31 NTM.
Genosource CAPTAIN (A2A2) takes charge in the United Kingdom at +882 PLI £ and 1.59 TM. No less than 92 points ahead of FG Kenobi Targaryen at 790 PLI £. Rounding out the top three is Denovo 15158 Admiral at 774 PLI £ who poses a great combination with 1.89 TM. Bomaz AltaTopshot at 708 PLI. Is the #1 daughter proven PLI sire of this April 2020 run. Topping the Type Merit bulls in the genomic bulls lists is Peak AltaHotjob at 2.99 TM. Followed by Crushtime his full brother Oh-River-Syc Crushabull at 2.91 TM. Siemers Lambda Haniko claims the third spot at 2.87 TM. Remarkable is the #1 daughter proven Type Merit bull in the U.K.: R&W sire Gen-I-Beq Attico-Red guarantees for 3.43 TM that also makes him also the #1 TYPE MERIT bull.
The Italian PFT list has a new number one and his name is Progenesis Matchpoint at +4632 PFT. Only 13 points behind is the #1 in from Switzerland: Plain-Knoll SI Magnitude at +4619 PFT.Rounding out the top sires is Westcoast Boulevard at +4619 PFT.
Zani Inseme Stradivari is the #1 domestic genomic sire in Italy at +4609 PFT & 1328 IES. The #1 daughter proven bull is the domestic sire Mirabell Sound System at 4298 PFT and 1045 IES. Second is the foreign sire and #1 in the International daughter proven PFT ranking: Cookiecutter Harper at +4202 PFT. Holbra Inseme Rodanas drops two places and is now the #3 daughter proven sire in the Domestic list at +3756 PFT.
Plain-Knoll SI MAGNITUDE makes a grand debut in Switzerland as the #1 ISET sire at +1754 ISET. Almost 100 points behind is S-S-I Rolan BRAWN at +1674 ISET. Who is then followed by former #1 sire Stantons ETHYMOLOGY at +1663 ISET.
The #1 daughter proven sire is Bomaz ALTATOPSHOT with 145 in production at +1532 ISET. Followed by Aot Silver HELIX at +1522 ISET and 538 milking daughters. The #1 ISET heifer is this run Riveting daughter Soppensteig Riveting Arina at +1700 ISET, with 13 points less follows Villstar Hotspot Liss Z at +1687 ISET enough for the second place.
There is a new leader in the German RZG system, and his name is CAPTAIN. This Hurtgenlea Richard Charl has a +169 RZG and is followed by Benz son BEST BENZ at +165 RZG. Rounding out the top sires is Gendry at +163 RZG. The highest new release sire is a Rio son Gen RAVE who came tied at #4 RZG with a +161 RZG.
The #1 daughter proven B&W RZG sire is also the #1 GTPI dtr proven sire: HELIX (s. Silver) at +161 RZG. Grando-Red an early Gywer *RC son tops the R&W Interbull genomic list is at +165 RZG. He is followed closely by the former #1 R&W RZG: Solitair P at +163 RZG. Spark-Red son Sportsman makes the top three complete at +156 RZG. The #1 daughter proven R&W RZG sire is again Pat-Red at +152 RZG with 2.321 daughters in production.
When the dust settles over the coronavirus, it is critical that all levels of government assist industry to rebuild.
The world has been turned upside down over the past month. The impacts on most people’s lives are extreme and this is likely to last for many weeks or months to come. As well as the personal toll, the financial impacts of coronavirus are unprecedented and are likely to be greater than World War II. Already it is having a devastating impact on the economy and will likely lead to a major recession.
In an effort to stave off a recession for Australia, both state and federal government financial packages to individuals and to businesses have been astonishing. But it all comes at a cost; it will lead to high debt levels which will probably take 10 years for the country to pay back.
In addition, the private sector will face a massive financial hit. Although the impacts on businesses will be partially offset by government spending, most businesses will be in a far worse financial position compared to pre-pandemic.
So what does all this mean?
It means that all industries will have to tighten their belts substantially and accept that this will probably take at least five years to recover from. The amount of money that businesses will have will be less, and the amount that state and federal government have to spend will also be reduced. This will have a domino effect, devastating businesses outside of the initial hit.
When the dust settles over the coronavirus, it is critical that all levels of government assist industry to rebuild and make significant funding available for this to occur.
As we are an essential industry like the rest of agriculture, the dairy industry has been able to continue operating during this time of crisis. Even though we have fared OK during the chaos to date, the long-term impacts could still be severe as we manage production when our export markets are in jeopardy.
While the state and federal stimulus packages and other financial support have been welcome and necessary to steer our nation’s economy through this troubled time; the government cannot take a short-term approach. It is going to be a long road back to a properly functioning economy and long-term projects and ongoing advocacy for our industry does not and cannot stop.
There are several good reasons why dairy and all agricultural industries are considered essential to the wellbeing and future of Australia. State and federal government need to be considerate of the long-term impacts on the economy and industries such as dairy beyond the next six to 12 months.
Dairy farmers in one of Canada’s largest milk-producing province are poised to dump millions of litres of milk due to coronavirus.
Dairy Farmers of Ontario has told farmers to get rid of raw milk to keep prices stable and prevent oversupply.
The industry group says demand has crashed as restaurants and other bulk buyers shutter due to Covid-19.
Some 500 farms have been asked to dump 5 million litres a week, according to a trade report.
The policy is a volte-face from last week, when Dairy Farms of Ontario, which oversees nearly a third of Canada’s dairies, had asked farmers to increase production amid concerns about a shortage.
“In its 55-year history, Dairy Farmers of Ontario has only once before had to ask producers to dispose of raw milk,” Cheryl Smith, the association’s CEO, told BBC.
Canadian dairy is produced under what is known as a supply-management system, which strictly controls production quotas and imports to support prices.
At first, the industry co-op was concerned there would not be enough milk to meet demand, as Canadians panic-bought at the grocery store. But hoarding has died down, and the dairy frenzy has waned.
Meanwhile, bulk-buyers like restaurants, hotels and schools have been forced to close due to federal restrictions. That means there’s milk on the shelves not being sold, risking a price plummet.
Dairy Farmers of Ontario is hoping that by spilling fresh milk, the supply will balance out and prices will remain stable. The group has not confirmed how much milk they are asking farmers to dump, but says it will be done on a “select and rotating” basis.
Producers told Ontario Farmer, a trade publication, that about 500 farms across the province have been asked to dump as much as five million litres a week. The province produces about 3 billion litres of milk a year, or about a third of Canada’s total supply.
“We are working very closely with processors and industry groups to respond to the unpredictable market fluctuations that are now part of our current environment,” Ms Smith said in a statement.
Dairy Farmers of Newfoundland and Labrador, another provincial dairy association, asked farmers to dump 170,000 litres last week. The province produces about 50 million litres a year.
Dairy Farmers of America, the largest dairy cooperative in the US, has also asked farmers to dump milk.
Dairy farmers aren’t the only industry struggling with how coronavirus has affected their supply and demand. Global oil prices have tanked with demand, as factories close down and air travel grinds to a halt.
But unlike dairy groups that have asked members to dump milk to keep prices stable, the Organization of the Petroleum Exporting Countries (OPEC) has decided to ramp up production. The move, spurred by a price war between Russia and Saudi Arabia, has pushed prices even lower.
The supply war has wrought havoc on another key Canadian industry- oil, based largely in the province of Alberta.
Dairy markets causing whiplash on Monday as we Class III move from limit down in May during early trading to rebound and see August trade limit up in the afternoon on the Chicago Mercantile Exchange. Class III milk finished a volatile day with a tale of two halves. April – June was in the red with April falling 19 to 13.88, May down 35 to 11.83 and June fell 8 to 13.05. July however gained 32 cents to 14.40 and the balance of 2020 saw gains of 24-41 cents in a late day rally. Class IV milk saw similar swings, April was unchanged at 11.36, May fell 13 to 11.02, and June was unchanged at 11.54. Second half months mixed from 13 lower to 19 higher.
Dry whey steady at $0.33. Blocks down $0.0225 at $1.1275. Barrels down $0.0475 at $1.09. Four trades were made, with a range of $1.09 to $1.10. Butter down $0.0250 at $1.2550. Nonfat dry milk unchanged at $0.8625.
Each year, the genetic base used to express genetic evaluations in Canada is updated in conjunction with the first official release. The definition of each genetic base used is therefore as follows:
The table below indicates the amount of base change realized in 2020 compared to 2019 for each trait and breed. For LPI, the following base adjustments reflect the change to the new scale with half the variance compared to previous years.
Cooperatives Working Together (CWT) member cooperatives accepted 28 offers of export assistance from CWT that helped them capture sales contracts for 2.013 million pounds (913 metric tons) of Cheddar and Monterey Jack cheese, 330,693 pounds (150 metric tons) of butter, 132,227 pounds (60 metric tons) of anhydrous milkfat, 74,957 pounds (34 metric tons) of cream cheese, and 1.803 million pounds (818 metric tons) of whole milk powder. The product is going to customers in Asia, Central and South America, and the Middle East. The products will be delivered from April through September 2020.
CWT-assisted member cooperative export sales contracts for 2020 total 10.869 million pounds of American-type cheeses, 1.607 million pounds of butter (82% milkfat), 132,227 pounds of anhydrous milkfat 1.915 million pounds of cream cheese and 10.593 million pounds of whole milk powder. The product is going to 22 countries in six regions. These sales are the equivalent of 232 million pounds of milk on a milkfat basis.
Assisting CWT members through the Export Assistance program positively affects all U.S. dairy farmers and all dairy cooperatives by strengthening and maintaining the value of dairy products that directly impact their milk price. It does this by helping member cooperatives gain and maintain world market share for U.S dairy products. As a result, the program has significantly expanded the total demand for U.S. dairy products and the demand for U.S. farm milk.
The amounts of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT pays export assistance to the bidders only when export and delivery of the product is verified by required documentation.
All dairy farmers and dairy cooperatives should invest in CWT. Membership information is available on the CWT website.
The Cooperatives Working Together (CWT) Export Assistance program is funded by voluntary contributions from dairy cooperatives and individual dairy farmers. The money raised by their investment is being used to strengthen and stabilize the dairy farmers’ milk prices and margins. For more information about CWT, visit www.cwt.coop.
A Wisconsin creamery cooperative is offering dairy farmers an incentive to quit an industry stung first by years of low milk prices and then by the coronavirus.
A letter from the Ellsworth Cooperative Creamery board of directors to members offers to pay their equity in the cooperative from 2010 to 2019 if the farmers meet certain criteria, WSAW-TV reported.
“We know we have farmers that are not sure whether they are going to exit farming this year or next year,” cooperative spokesman Paul Bauer said. “We felt that this was a way to incent our farmers to exit the business, perhaps a little earlier than what they expected, for the betterment of the entire patron base.”
Paul LIppert, who runs a Wood County dairy farm with his father and brother, said the cooperative is trying to help its farmers. He said there’s “a glut of milk” and it doesn’t look like ” things are going to get better very quickly.”
The COVID-19 pandemic has added to the industry’s troubles. Several farms throughout Wisconsin have been asked to dispose of their milk while production plants struggle to keep up with the milk that is being produced.
Jim Moore has been involved in dairy farming for most of his life, but with the COVID-19 pandemic, he says his industry and the ones he serves have been affected.
Moore told 12 News the milk produced from his 80 cows at the Moore-Stream Farm is picked up every other day, but on Sunday, he found it wasn’t going where he thought it was.
“The milk truck driver couldn’t look me in the eye because he told me it’s going in a manure pit today,” Moore said, “Didn’t go to a processor, it got dumped in the manure pit.”
Many restaurants and bars have either closed or moved to solely delivery and pick-up options as part of New York’s fight against COVID-19.
But Moore says that business for restaurants and the food industry is also key for dairy farmers, and has hit his wallet hard.
“I’m scared for all the small farms. The restaurant and food industry has slowed down, they take a third of the milk products in this country,” Moore said. “From one month to the month before, I lost $2000. $2000 goes a long way to pay my fuel bill.”
Those dollars aren’t just vital for him and his farm operations, but also for business partners.
“The people I do business with count on my money to put product back in their line to sell to me,” Moore said.
But despite the frustration he has at the economy, he’s not ready to quit, but is asking for some help.
“I can’t give up yet,” Moore said. “These banks are going to have to help the farmers out, not just shut the door in your face.”
Restaurants have been shuttered for weeks. Farms have been struggling with labor shortages for years. And grocery stores have been running out of bread, meat and eggs.
So what does that all mean for the national food supply during the COVID-19 pandemic?
The short answer is that U.S. agriculture is strong enough to handle it, with farmers still farming and no major shortages in sight, experts say. But because consumers recently have changed the way they buy and consume food, various snags in the food supply chain have led to disruptions, including truckloads of raspberries getting turned back from market and dairy businesses dumping thousands of gallons of milk.
“There will be enough food produced on the farm,” said Zippy Duvall, president of the American Farm Bureau Federation. But “there’s a lot of things that happen to the food before it gets to the consumer, whether it be in processing or transportation. If this thing was to get worse, what problems come along with that? None of us really know.”
Panic-buying and stockpiling by consumers have cleared supermarket shelves of certain foods in the meantime, creating the appearance of a problem. But those shelves are soon restocked, and the frenzy is expected to subside as supply chains adjust and home refrigerators run out of room.
The pandemic still has different ways it could impact food prices and dinner tables across the U.S., which imports only about 15% of its overall food supply.
The drastic reduction in restaurant dining could lead to cheaper butter while also putting some farms in financial despair. Unpredictable consumer shopping surges could cause more produce trucks to be delayed or redirected at a loss. The virus also could infect scores of farmworkers, adding to a series of concerns from farm to table.
Labor shortages in the fields
This problem preceded the pandemic but could get tangled up by it even more. Temporary foreign visa workers made up 20% of the country’s farm workforce, with most coming from Mexico, according to the American Farm Bureau Federation. Approximately 250,000 of these workers were approved to work in the U.S. in 2019.
But then when the coronavirus outbreak flared in March, the U.S. suspended routine immigrant and nonimmigrant visa processing services, raising concerns from American farms about being cut off from this labor supply. After hearing these concerns, the U.S. State Department since has eased requirements for these workers, much to the relief of farmers, who say they need their specialized help.
“Even with those 250,000, we still don’t have all our jobs filled, so we really need to have those 250,000,” Duvall told USA TODAY.
Duvall said he is hopeful that the loosening of restrictions will help meet farms’ labor needs. So is Carolyn O’Donnell, spokeswoman for the California Strawberry Commission, which represents more than 400 strawberry farmers, shippers and processors.
“Labor is always a concern for strawberries,” O’Donnell said. “They are hand-planted, hand-weeded, handpicked and hand-packed.”
At the same time, there’s a pandemic on the loose.
What if the farmworkers get sick?
Farms in California will have about 20,000 workers in the fields in coming weeks picking berries for Driscoll’s, the world’s largest berry supplier. What if 15% of them get sick?
“You just won’t be able to pick the whole crop,” said Soren Bjorn, president of Driscoll’s of the Americas.
Bjorn told USA TODAY his company has planned for such worst-case scenarios and has worked with partner farms to mitigate this risk by breaking up workers into groups of 10 instead of 30, staggering breaks and adding hand-washing stations, among other measures.
Prevention efforts still vary by farm. Many farmworkers also are undocumented, poor and not likely to stay home if sick because they need the money.
“Not all, but most of the companies are not taking the necessary precautions, such as informing the workers about what COVID-19 is and the basic kind of protocols they should be following to take care of their health,” said Arcenio Lopez, executive director of the Mixteco/Indígena Community Organizing Project, which supports indigenous migrant communities in California’s Central Coast.
In theory, the cratering economy could lead to a larger labor supply, helping fill any farm labor shortages. But these are specialized jobs that not everybody wants even if they’re unemployed.
“There just aren’t a lot of people out there who are going take these jobs,” Bjorn said. “There will be some… But if you have a very large outbreak, of 15 or 20% of the population, there won’t be a way to back-fill that.”
Even if farm workers are young and might not get sick, the risk of a workforce reduction still looms over farms and their crops.
“The food supply for our nation is planted already, and if you have no way to harvest your crop, you not only lose the opportunity to supply consumers now, you begin to reduce the overall quantity and availability of food in the future,” said Hector Lujan, CEO of Reiter Affiliated Companies, which grows Driscoll’s berries in the U.S. and Mexico.
Why restaurants being closed makes butter cost less
In 2018, food away from home accounted for about 54% of the $1.7 trillion in U.S. spending on food, according to the U.S. Department of Agriculture. In the age of COVID-19, the seismic shift from dining out to dining in already has rippled through dairy industry, creating a situation in which there is too much butter from the farms and not enough bread in the stores.
On the one hand, the surge in demand for some food products at retail stores can be accommodated in part because restaurants are no longer are using as much supply.
On the other hand, some products “just don’t transition well into the retail space” from restaurants, said John Newton, chief economist at the American Farm Bureau Federation. “A good example of that is butter. Much more butter is used in restaurants and bakeries than what people use at home. So you’ve seen spot market prices for butter and cheese fall pretty sharply since this started.”
The price per pound of Grade AA butter has dropped from $1.86 on March 6 to $1.28 April 3, according to the Chicago Mercantile Exchange. The drop might not lead to lower prices at the grocery store anytime soon because retailers might not immediately pass that reduction to consumers.
“It’s such a terrible thing,” said Julie Sweney, spokeswoman for the FarmFirst Dairy Cooperative in Wisconsin. “We’re hopeful we’re able to secure some emergency measures that will help support diary farmers through this time.”
The cost of food without a steady paycheck
While meat is in high demand from consumers now, the falling futures market for meat has concerned farmers, said Newton, the economist. This is based onexpectations of a shell-shocked economy and depressed demand because of lost jobs leaving consumers without enough money.
“The 2008 financial crisis showed us what can happen when reduced income and uncertainty make people spend less and result in shrinking demand,” said a report on COVID-19 by the Food and Agriculture Organization of the United Nations. “Sales declined. So did production.”
This, in turn, could lead to a shift of what farms produce and what kind of food consumers eat. Much will depend on how well the recent economic stimulus package works from Congress, with some Americans soon getting one-time checks of $1,200.
If that’s not enough to sustain the purchasing power of laid-off workers, “then people may have to start saving on food and shift to cheaper and potentially less healthy foods,” said Rob Vos, director of the Markets, Trade and Institutions Division of the International Food Policy Research Institute.
Specialty farms that supplied upscale restaurants with local, organic food also may suffer because of restaurant closings.
“Any product that is on the fancy end will have more reduced demand,” said Dan Sumner, director of the University of California Agricultural Issues Center. “That always happens in a recession and when there is uncertainty.”
Access and delays
Some local governments, including in San Diego, shut down farmers’ markets in March, but others have classified them as essential businesses during the pandemic, helping keep commerce flowing from farm to table. These are open-air alternatives to supermarkets, with the usual precautions emphasized, including social distancing and washing the produce, although there is no evidence that supports the transmission of COVID-19 by food.
Hoarding still has been prevalent but is expected to subside. Many are open for business in California and elsewhere.
“Our meat was selling out in an hour and a half at all these markets,” said Gail Hayden, director of the California Farmers’ Markets Association. “There’s no shortages, just overbuying, and then there’s a lag filling up the supplies in the traditional system.”
This also happened with a recent order of more than 10 truckloads of Driscoll’s raspberries. The customer canceled at the last minute after getting too backed up with other produce, Bjorn said. He said retailers had pushed produce down their priority lists in an effort to get other high-demand products back on the shelves, including toilet paper, Bjorn said.
Fruit wasn’t getting to the stores in time as a result, and some of it spoiled in the delay. In this case, Driscoll’s fresh raspberries got redirected into becoming frozen raspberries, causing Driscoll’s and its partner farms to get only 20 cents on the dollar in return.
Bjorn is hopeful these kinks are smoothing out as consumers develop more regular shopping patterns. Other questions remain, such as whether customers are willing to buy what they normally buy at peak berry supply in May.
Supply shortages won’t be the issue then either.
“The food supply chain is remarkably resilient and effective,” Sumner wrote in an e-mail. “Sure there are little inconveniences. But the basics are in great shape.”
When reports of the COVID-19 pandemic first hit the US, very few people had likely heard of coronaviruses—with some notable exceptions: cattle producers and their veterinarians.
It’s not that people involved with cattle health have any particular insight into the increasing human toll the novel coronavirus is inflicting. Rather, it’s a reflection that generations of cattle producers have recognized coronavirus as a significant cause of diarrhea in their young calves.
What’s the connection between the novel coronavirus (designated “SARS-CoV 2”) causing COVID-19 across the world and the “scours” germ cow-calf and dairy producers deal with? Except for the name, very little.
There are many different versions of human and animal coronaviruses throughout the world. Many animal caretakers have probably dealt with coronavirus infections for years without realizing it. Swine producers and their vets have fought Porcine Epidemic Diarrhea (PED) Virus and (historically) Transmissible Gastroenteritis (TGE) Virus. Companion animal veterinarians recognize Feline Infectious Peritonitis (FIP) Virus as a cause of illness in cats – all coronaviruses.
Considering the above list, it should be apparent that the vast majority of these coronaviruses stick to their own species. No human or cross-species illnesses have resulted from bovine coronaviruses, PED, TGE, or FIP.
This is due to the very specific molecular makeup of the “spikes” on the surface of each different coronavirus version. In order for coronaviruses to cause infection, these specific spike molecules need to attach to very specific molecules on a body cell, in a lock-and-key fashion. Pig cells have different surface molecules than do calf cells, than do human cells, and so on. Additionally, respiratory cells have different surface molecules than do intestinal cells. This explains why different coronavirus strains affect specific species and body systems.
It also explains the variability in the usefulness of different coronavirus vaccines (fair for bovine coronavirus, good for TGE, poor for PEDV) in animals. Additionally, it also highlights the fact that our current animal coronavirus vaccines have no utility for people in the face of the COVID-19 epidemic. Severe adverse reactions (due to the additives in these products) can result from people using animal vaccines for themselves.
Yet changes can occur to these viral molecules over time. A small shift in the molecular structure of the spike, and you may end up with a virus that can affect a different part of the body or different species.
In investigating where COVID-19 cases began, authorities have pointed the finger at a “wet market” in one Chinese city. Wet markets are fascinating places where people can buy supplies, food, and live animals. The variety and number of live animals for sale can be astounding: chickens, pigeons, bats, rodents, snakes, and more. Throw in thousands of human shoppers and you have a unique opportunity for viruses to “try out” infecting species besides their normal host. Sometimes – apparently in this case – it works.
There’s some historical precedence to fall back on here. Severe Acute Respiratory Syndrome (SARS) took the world by storm in the early 2000’s. With its likely origin in a bat, it looks like that coronavirus slowly circulated among people in wet markets before it became efficient at infecting people. MERS (Middle Eastern Respiratory Syndrome) emerged quite similarly more recently – with origins in bats and camels. Much more commonly, other circulating “normal” coronaviruses cause cold symptoms in people everywhere.
Could common animal coronaviruses (e.g., bovine coronavirus or PEDV) ever morph into viruses that make people sick? Despite our long history with these germs, it hasn’t happened yet. When PEDV splashed into the world of pork production in 2013, it wasn’t because of a change in the virus: it simply was moved from overseas to the US.
Despite its likely animal origin, the current coronavirus causing COVID-19 hasn’t yet made animals sick where human illnesses have been common. That’s the good news for our animals. Swings in global financial markets have occurred due to worries about restrictions on travel and other human activity, not any perceived problem with livestock or the food supply.
But things can change. The COVID-19 situation bears close watching, especially if evidence emerges that the virus is behaving in a different manner than currently expected.
“The processing plant has so much capacity and if milk’s not leaving the processing plant, they’re not taking it in and since we’re dealing with a perishable product, there’s some time sensitivity involved in it,” he said.
Spreng said he had to dump 6,200 pounds of milk on Thursday.
“We’ve gotta feed these cows tomorrow, we’ve gotta care for them, we have a staff of 10 full-time excellent employees who have been here every day through this pandemic and they have families at home,” he said.
“The dairy industry has been really turned around 180 degrees,” said Ty Higgins with the Ohio Farm Bureau Federation.
They and the American Dairy Association Mideast said the loss of the restaurant and school markets have changed the production chain.
“The milk that went to produce cheese and yogurt and butter now is being produced for more fluid milk,” said Higgins.
“The underlying issue to all this is we’re getting word and experiencing ourselves that retailers are reducing and restricting the amount of dairy products available to consumers,” explained Spreng.
American Dairy Association Mideast CEO Scott Higgins said discussions have been positive with grocers.
“Our message to our grocers and our grocer association is that there’s plenty of dairy products to meet their need, to lift those limits,” he said.
Scott Higgins said Kroger tells him they are getting the message out to their stores to remove limits.
“There are many other stores that are doing the same thing and slowly but surely we’re getting that message out,” he said.
The organizations and farmers said this goes beyond the dairy industry and many other jobs and households could be impacted.
“One of the stories that we received from our local food bank is that they had gone to purchase 38 gallons of milk for that week’s distribution and were not able to get it,” said Spreng.
Food banks are an area Scott said he’s working to supply with the surplus.
“We’re working as quickly as we can with the Ohio Association of Foodbanks and Ohio’s foodbanks to find a home for some of these dairy products that have no place to go right now,” he said.
One viewer told us her local grocery store lifted their limits after she called them. The bureau asks anyone who sees a store limiting the purchase quantity on milk to take a photo of the limit sign, note the location, date and time, and email it to Erin.Brown@Drink-Milk.com.
COVID-19 has brought the U.S. economy to a screeching halt, ushering in a recession in the process. For most businesses, the sudden stop to the economy is more jolting than the financial crisis of 2008 and has forced hard, immediate decisions about employees and finances. According to a new Quarterly report from CoBank’s Knowledge Exchange, COVID-19 has also underscored the critically important nature of agriculture and other industries essential to rural America.
“This quarter will largely define the next year in terms of the economy and how severe the damage caused by the coronavirus will be,” said Dan Kowalski, vice president, Knowledge Exchange, CoBank. “Nearly everyone will be impacted to varying degrees and the pace of the recovery will be uneven. But the economy had been on good footing and it’s entirely possible that we can get back to reasonable strength within a few quarters.” The U.S. grain sector remains stuck in a rut, with pressure on commodity prices, weakening basis for corn and soybeans in some markets, and export volatility likely over the next two to three months. Since 2020 began, corn prices have declined by 12% and soybeans prices have dropped by 7%.
While crop farming fundamentals remain challenging, ag retailers enter the 2020 growing season on relatively stable footing. Retailers are optimistic for a full agronomy season given pent-up demand for fertilizer and crop protection products following last year’s complicated and wet fall application season.
The U.S. ethanol complex is navigating through an extremely difficult operating environment exacerbated by the recent collapse in crude oil and gasoline prices and a virtual overnight evaporation of demand. Several large players have restructured or exited the business, with more expected to do so over the next three months.
The U.S. chicken industry entered 2020 with optimism largely driven by expectations for renewed exports to China. That focus swiftly changed to the domestic market in early March when the spread of the coronavirus dramatically shifted the U.S. market to at-home eating, boosting chicken demand. Chicken production grew 7.7% in the first two months of 2020.
The U.S. cattle complex has seen a swift and sharp decline in the last month following the drop in global equities and oil prices. Since mid-January, April live cattle futures have fallen by approximately 25%. The beef complex profit pool is shifting in favor of packers at the cost of lower feeding margins. The loss of restaurant and foodservice customers due to COVID-19 will test beef prices this spring.
China’s demand for U.S. pork has set export records, but it hasn’t led to strong prices or profit margins. While international demand has been significantly higher than last year, so has U.S. pork supply. Hog producers are expected to realize negative margins through April, before margins turn to positive territory this summer. To realize strong margins, producers will need strong export growth to continue.
Milk prices have fallen precipitously in recent weeks due to COVID-19. The seasonal increase in milk supplies with the spring flush was met with economic weakness in China and other countries, impacting dairy exports. School closings have impacted fluid milk consumption. Home stockpiling has provided some price support, but not enough to offset the losses related to food service.
Despite strong exports, cotton prices have sunk to new lows on fears of slower global economic growth. U.S. cotton exporters are optimistic of faster export pace following India’s announcement of lockdown into the first half of April, which may impair India’s cotton export pace. Meanwhile, rough rice futures surged to new highs, driven by a surge in retail rice sales and tighter global stocks.
U.S. specialty crop growers are fearing an even tighter labor situation unfolding this spring as processing of new H-2A visa applications in Mexico is impaired by COVID-19 complications. Specialty crops growers have benefited from the surge in produce sales at grocery stores but saw reduced exports due to logistical issues related to COVID-19.
Broad segments of the power and energy sectors are likely to realize falling revenues in Q2 2020 and possibly beyond. Electric utilities will suffer from weakening electricity consumption by the commercial and industrial sectors. Rural water systems will also face challenges during the economic downturn.
The full Quarterly report is available on cobank.com. Each CoBank Quarterly provides updates and an outlook for the Global and U.S. Economic Environment; U.S. Agricultural Markets; Grains, Biofuels and Farm Supply; Animal Protein; Dairy; Other Crops; Specialty Crops and Rural Infrastructure Industries.
From 2002 to 2019 the state of Texas had the biggest increase in milk production in the U.S. both in absolute and relative terms. Texas increased milk production by 8.55 billion pounds, which represents 160% increase from 2002 to 2019 (Figure 1).
During this time frame, Texas went from being the No. 10 to the No. 5 state in milk production in the U.S. If these trends continue, in the next few years Texas might surpass New York state and become No. 4. In 2019, Texas and New Mexico combined produced 10% of the milk in the U.S. (22 billion of the 218 billion pounds produced in the country) highlighting the economic importance the dairy industry has for this region. Roughly, 80% of the milk production in New Mexico takes place in the East region of the state and a similar proportion of the milk in Texas is produced in the Panhandle. Therefore, combined, the Texas Panhandle and Eastern New Mexico region is one of the biggest milksheds in the country.
Similarly, Idaho and Michigan milk production increased considerably from 2002 to 2019 (91.7% and 91.5% respectively). The only state that showed a decrease in milk production was Pennsylvania. This is explained by the decrease of milk cow inventory in the state (Figure 2) due to longstanding consolidation of the dairy industry combined with several years of low milk prices that led to acceleration of small dairies running out of business in the Midwest.
What was the cause of the increase in milk production in Texas?
The biggest factor driving the increased production was a significant growth of the dairy cow inventory in the state. In 2002, there were roughly 310,000 dairy cows in Texas whereas there are over 580,000 today (almost 90% increase, Figure 2). This increase occurred in the Panhandle area of Texas that had less than 20,000 dairy cows in 2001 and now has over 400,000 dairy cows. This was associated with dairy farmers moving mostly from the West coast of the U.S., but also from other states of the country or regions of Texas, to the Panhandle.
However, increase growth of dairy cow inventory was not the only factor contributing to increase milk production in Texas. Improvements in genetic selection, nutrition, environment, reproduction and management practices have contributed to the increase of milk production.
What are some opportunities for the future?
– Use of precision technologies and automation to facilitate daily tasks, and accurately measure behavioral and production variables to guide managerial decisions intended to improve animal performance and welfare.
– Develop Extension programs to train farm managers and workers on sustainable dairy practices and best animal welfare practices.
– Perform research to improve use of ground water irrigation, digestibility of drought tolerant crops, and nutrient management in dairy operations.
– Continued genetic improvements to decrease disease susceptibility, improve reproductive performance and feed efficiency which will have a positive impact on the environment.
– Provide unbiased, science-based information on agricultural practices and nutritional value of dairy products to build transparency and trust with consumers.
– Educational programs for the youth including field trips to dairies to show daily activities and job opportunities in the industry to engage and encourage them to pursue a career in the dairy industry.
U.S. Department of Agriculture, National Agricultural Statistics Service. 2002, 2007, 2011, 2015 and 2020. Milk Production.
Dairy markets continue to experience deep impacts from COVID-19 through lockdowns of people in many major countries, disrupting trade and shutting large segments of the food market to consumers.
Uncertainty grows as we are only in the early stages of the pandemic which will continue to rapidly evolve over the coming months.
The impacts of lockdowns to control the spread of disease on employment in major business sectors will transform into staggered and uncoordinated measures to unwind restrictions and settle into a deep recession in major economies – the length and depth of which depends on many factors.
These profound changes will significantly impact the upstream supply chain, causing changes in product mix in response to major shifts in product demand – mainly due to weaker cheese demand – to avoid large production of mozzarella and processed cheese. The short surge in retail sales, as consumers shifted to eating at home, has eased.
Commodity markets reflect those risks, influenced also by supply-side dynamics as milk output builds towards the seasonal peak in Europe and the US. Demand from importing developing regions remains robust, including a recovery in Chinese business and consumer activity, conditional on COVID-19 being held in check.
While the market crash has been sudden, milk price signals and supply side impacts will lag.
Commercial and policy measures may intervene to address surplus milk supplies and take excess product off the market – kicking the can down the road into a scenario that global markets have only just shaken off.
Skim Milk Powder
SMP prices have fallen with the expected rapid stock build – initially as a result of slowing of global trade with restrictions on freight and logistics. The risk has escalated with the expected increase in SMP and NFDM production as major producers avoid production of cheese exposed to food service markets which have been decimated by COVID-19 lockdowns.
Whole Milk Powder
European spot prices rose in March after softening in February as global markets continued to be disrupted by the spread of COVID-19. NZ values dropped under US$3,000/t mid-March and continued to slide through the month. NZ shipped prices rose, widening the gap to South American shipped values.
WMP prices cannot remain immune from falling protein and fat values. The weaker global economic outlook – especially with the uncertainty ahead for oil-producing countries – is likely to see further preference for FFMP, which may gain improve share in more traditional WMP markets.
These profound changes will significantly impact the upstream supply chain, causing changes in product mix in response to major shifts in product demand – mainly due to weaker cheese demand – to avoid large production of mozzarella and processed cheese. The short surge in retail sales, as consumers shifted to eating at home, has eased.
Global cheese markets are likely to be heavily impacted by the sudden loss of sales into food service. The US industry is most-exposed with near 50% of cheese sales reliant upon food service outlets.
Global cheese trade had a long sustained run of growth from Q4-2018 into early 2020 and grew 7% in the 3 months to January.
Butterfat markets have weakened with the risks to demand for butter, AMF and cream from the shutting of food service channels in major markets.
Butter markets in the EU and Oceania were delicately poised prior to the impact of major lockdowns in March 2020. Prices had steadied in EU wholesale markets as demand improved and export markets (only about 10% of EU output) surged.
Commodity whey prices have been caught in the impacts of COVID-19 on the wider dairy complex, which continues to be weighed by the contraction of demand for commodity whey in the Chinese and other Asian animal feed markets.
US dry whey output increased 10% in the 6 months to January as producers scaled back WPC output and demand for dry whey improved, including some switching from milk protein use with steadily rising prices.
Wisconsin Farmers Union has received a number of inquiries from concerned consumers along the lines of, “Can’t farmers do something with the milk other than dump it? Why are farmers disposing of milk when I’m being limited on milk purchases at the store?”
This situation is indeed troubling. It is heartbreaking for farmers to have to dispose of their milk like this.
The reason this is happening right now is that many of the largest institutional buyers of dairy products, including schools and restaurants, abruptly closed nationwide — and they, in turn, abruptly cancelled orders that they had placed with cheese plants and milk bottlers. Since most dairy products are perishable, dairy processors can only store a limited amount of product that they don’t have a buyer for. Once their storage is full, they start turning away farmers’ milk from the plant because they have nowhere to put the finished product.
Farmers Union and other advocacy groups have urged the USDA to step in and buy surplus dairy products for distribution to food pantries, etc. We are hopeful that this will happen soon, and begin to relieve the current kink in the dairy supply chain.
The other thing that will hopefully happen, but this will take a bit more time, is for dairy products that were originally destined for restaurants to be re-packaged for retail sale. People are buying less food at restaurants right now, but they are buying more food at grocery stores. Unfortunately, it will take some time for food processors to make that conversion. A cheese plant that normally produces unbranded 50-pound bags of mozzarella cheese for restaurants cannot instantaneously convert its production line to make branded 16-ounce packages of cheese for grocery stores. Hopefully business owners will get creative and start coming up with new ways to meet consumer demand for dairy products outside of the restaurant supply chain.
There is one other important action that Congress could take. For many years, WFU has urged Congress to create a mechanism that would give farmers the economic incentive to balance their milk production with market demand, so that farmers never find themselves in the terrible situation of having to dispose of milk that doesn’t have a home. This current circumstance really drives home the need for balancing dairy supply and demand. While nothing could have entirely insulated the dairy industry from the impact of the global pandemic, farmers would be far better off in this moment if we had a program in place to help them quickly adjust their production in response to market conditions.
As a farm organization, we really appreciate consumers’ concern for farmers. If the grocery store where you usually shop is still limiting customers to only 1 or 2 gallons of milk, the Wisconsin Department of Agriculture, Trade & Consumer Protection suggests that you ask the store manager to consider lifting that limitation. It appears the initial flurry of stockpile-buying has tapered off, and many stores can now keep the dairy case stocked even without limiting purchases. So please do continue supporting dairy farmers by buying their products. But let’s also work together for greater structural change that ensures we keep family farms on the land. Thank you, and stay well.
Kara O’Connor is Government Relations Director for Wisconsin Farmers Union, a member-driven organization committed to enhancing the quality of life for family farmers, rural communities and all citizens through educational opportunities, cooperative endeavors and civic engagement. Learn more at www.wisconsinfarmersunion.com.
The coronavirus pandemic is setting back a number of industries, including dairy farms.
Even though low prices and high demand is causing milk to fly off the shelves in grocery stores, the pandemic has caused a shift in the dairy supply chain leaving some farmers forced to dump thousands of gallons of milk down the drain.
The outbreak has dried up the marketplace for dairy products as the industry’s top consumers remain close.
Restaurants, food service businesses and schools fuel a large part of business for dairy farmers. With them closed for the foreseeable future, it’s leaving farmers depending on just retail to sell their milk.
“That humongous segment of food service is not taking in the products like they used to,” said Nate Chittenden, dairy farmer and owner of Hollow Dutch Farm in Schodack Landing.
“We’re going to have to learn that some of these things take time through the supply chain to react,” said Chittenden.
Though Chittenden hasn’t been forced to dump any milk yet, he remains nervous because he knows the shift in the supply chain won’t be short term.
“If our economy is going to be down for a long time and that food service doesn’t come back on and we don’t see the same amount of dairy being used in our country as we were used to that means there’s going to be an over supply,” said Chittenden. “Our price forecast already shows milk prices is going to be much lower in the next couple of months so we’re trying to figure out where we’re going to cut costs.”
Unlike other businesses, dairy farms are dealing with can’t shut down production because their cows need to be taken care of and fed daily.
“A factory that knows that they don’t have to produce something, they can shut down the production line temporarily, lay off their employees, send them home and minimize their losses. They’re not selling something but they’re also not producing things. That cost the money,” said Chittenden. “For us, we still have to feed these cows every day and we still have to milk them every day whether that product is being picked up and sold or not.”
Chittenden said the two biggest costs are feed and labor.
The dairy industry has been struggling in recent y ears, and was just bouncing back up before the COVID-19 outbreak.
“We have been in an over supply in this country of dairy for several years now, since 2015, we’ve had more milk in this country than what we can possibly produce,” said Chittenden. “This is not a one month problem for us that we’re looking at. This has been five years.”
“As dairy farmers, we are nervous because, for the short term, we are still living day-to-day knowing that we had to take care of these cows but there’s going to be farms that are going to have to be making long-term decision,” said Chittenden. “Ultimately there’s going to be farms that look at their business plan and realize that they is no way that they’re going to be able to keep going.”
FILE PHOTO: The milking parlor at the Eble family’s Golden E Dairy farm near West Bend, Wisconsin, U.S., April 1, 2020. Mark Hoffman/Milwaukee Journal Sentinel/USA TODAY via REUTERS
Dairy farmer Jason Leedle felt his stomach churn when he got the call on Tuesday evening.
“We need you to start dumping your milk,” said his contact from Dairy Farmers of America (DFA), the largest U.S. dairy cooperative.
Despite strong demand for basic foods like dairy products amid the coronavirus pandemic, the milk supply chain has seen a host of disruptions that are preventing dairy farmers from getting their products to market.
Mass closures of restaurants and schools have forced a sudden shift from those wholesale food-service markets to retail grocery stores, creating logistical and packaging nightmares for plants processing milk, butter and cheese. Trucking companies that haul dairy products are scrambling to get enough drivers as some who fear the virus have stopped working. And sales to major dairy export markets have dried up as the food-service sector largely shuts down globally.
The dairy industry’s woes signal broader problems in the global food supply chain, according to farmers, agricultural economists and food distributors. The dairy business got hit harder and earlier than other agricultural commodities because the products are highly perishable – milk can’t be frozen, like meat, or stuck in a silo, like grain.
Other food sectors, however, are also seeing disruptions worldwide as travel restrictions are limiting the workforce needed to plant, harvest and distribute fruits and vegetables, and a shortage of refrigerated containers and truck drivers have slowed the shipment of staples such as meat and grains in some places.
Leedle could likely sell his milk if he could get it to market. Dairy products in grocery stores have been in high demand as consumers stay home during the pandemic, though panic buying may be slowing. Earlier this week, a local market told Leedle’s wife she could buy only two dairy products total per shopping trip as retailers nationwide ration many high-demand products.
“It’s just gut-wrenching,” said Leedle, 36, as he stood inside his barn, with cows lowing softly as the animals were giving milk that would be funneled directly into a manure pit. “All I can see is that line going down the drain.”
Leedle has dumped 4,700 gallons of milk from his 480 cows each day since Tuesday. The 7,500-member DFA told Reuters it has asked some other farmers in the cooperative to do the same but did not say how many.
Dairy cooperatives oversee milk marketing for all of their members and handle shipping logistics. Leedle said he will be paid for the milk he and other farmers are dumping, but the payments for all cooperative members will take a hit from the lost revenues.
Land O’Lakes Inc., another cooperative, has also warned its members they may have to dump milk. Another cooperative, Wisconsin-based Foremost Farms USA, was even more grim.
“Now is the time to consider a little extra culling of your herds,” the cooperative said in a March 17 letter to members. “We believe the ability to pick up and process your milk could be compromised.”
The cooperative, which also owns butter and cheese processing plants, said milk-dumping might also be on the horizon.
The dumping comes even as consumer demand for dairy has soared. Panic buying has left grocery store shelves nearly empty in recent weeks amid business shutdowns and quarantines nationwide. Retail purchases of milk rose nearly 53% for the week ended March 21, while butter sales surged more than 127% and cheese rose more than 84%, compared to the same period a year earlier, according to Nielsen data.
Grocers have been charging consumers more, too. The average retail price of cow’s milk was up 11.2% for the week ended March 21, compared to a year earlier, the Nielsen data shows.
RESTAURANT CLOSURES DISRUPT SUPPLY CHAINS
Finding enough truck drivers is part of the challenge. Agriculture groups have lobbied states to increase truck weight limits on highways to enable more food to be delivered.
Dean Foods Co, which has been starting 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.
Another major problem: The sudden shift in demand from restaurants – now closing en masse – to grocery stores creates severe logistical challenges. Suppliers struggle to make the shift from wholesale packaging for restaurants to preparing retail products for stores.
“About half of U.S. consumers’ food budget was spent on restaurants, and we’ve shut that spigot off,” said Matt Gould, editor at trade publication Dairy & Food Market Analyst.
It would take millions of dollars, for instance, to install new equipment to switch a plant from making one type of cheese – such as barrel cheese used to make processed slices for fast-food restaurants – to producing cheddar wedges for grocers, said dairy analysts. Even switching from bagging 10 lb bulk bags of shredded cheddar for food service to 8 oz bags for retail stores would require costly new packaging robots and labeling machinery.
Schreiber Foods Inc, one of the country’s top dairy product manufacturers and food distributors, is cutting hours for workers at its dairy processing plants that normally supply the restaurant industry and adding staff to plants that stock the U.S. retail market, said spokesman Andrew Tobisch.
As of last week, the plants serving retail were bottlenecked.
“We’ve almost had too many trucks showing up at some of our plants,” Tobisch said. “The deliveries get backlogged and the drivers are having to wait longer and longer.”
Trucks heading to restaurants, meanwhile, are getting sent back. Sartori Cheese in Plymouth, Wisconsin, has had restaurant customers refuse shipments of food they had ordered, said president Jeff Schwager. Some restaurant customers have called, asking if they can return orders delivered weeks ago. But processors can’t take the cheese back and resell it – or even donate it – because they can’t ensure it has been safely handled, Schwager said.
Some of Sartori’s grocery retailers are telling Schwager they are closing their gourmet cheese counters with their displays of huge cheese wheels, in favor of pre-packed, grab-and-go wedges. The stores want to redeploy those cheese counter crews to stock shelves and handle other tasks, Schwager said.
That means Sartori Cheese will need far more film wrap of a different size that is now in short supply as demand skyrockets.
Meat producers and fruit-and-vegetable farmers are also struggling with the shift from wholesale to retail, causing plentiful products to run short on grocery store shelves.
Paul Sproule, a potato farmer in North Dakota, said processors who churn out french fries and other restaurant products have stopped buying. Most can’t pivot to retail because they don’t have customer-facing packaging or relationships with stores for shelf space.
FILLING THE GAPS
In rural communities, smaller food retailers such as bakeries are starting to stock products that have been running short at grocery stories. In the farm town of Rossville, Indiana, local baker Sandra Hufford’s picked up grocery products from a food distributor, including butter, cartons of cottage cheese and gallons of milk.
“They told me that they had a lot of customers not wanting to pay right now, and they needed cash-paying customers,” said Hufford, who owns the Flour Mill Bakery.
Hufford stocked up her bakery’s refrigerated case and posted what was available for pickup and delivery on the shop’s Facebook page. Word spread. Now, customers from as far as Indianapolis – 60 miles away – are placing orders and driving out to pick up groceries.
On 2 April, the European Commission proposed a package of measures to soften the blow of the coronavirus pandemic on the EU economy.
According to analysis from Reuters, the package includes a short-time work scheme and easier access to funds for farmers.
The Commission expects the EU to go into a deep recession this year as the pandemic slows economic activity to a crawl across the 27 members states.
“The depth and the breadth of this crisis requires a response unprecedented in scale, speed and solidarity,” the EU executive said in a document outlining the measures.
To prevent firms from laying off workers when there is not enough work, the Commission proposed that all EU countries adopt a German scheme under which employers cut working hours, not jobs, and the government pays for the difference in salaries, so that workers retain their spending power.
“[It] can benefit all the member states who want to use it,” Commission president Ursula von der Leyen told a news briefing.
To finance the plan, the Commission would borrow 100 billion euros on the markets against 25 billion euros in EU governments’ guarantees using its triple-A rating. It would then lend the money cheaply to member states, many of which have lower credit ratings.
Once asked by a government for help with wage subsidies, the Commission would verify how much extra that country was spending on the scheme and decide the terms of the loan, including the amount, the maximum average maturity and pricing.
A Commission proposal for a loan would then have to be approved by EU governments.
The Commission also proposed to increase cash advances to farmers under the EU’s Common Agriculture Policy and give them more time to apply for support.
The proposed measures, which still need the approval of the European Parliament and EU member states, will apply retroactively from 1 February and will be available until 31 December.
Australian dairy processors are adapting to rapidly evolving markets, but warn global commodity markets face increased uncertainty due to the COVID-19 pandemic.
Bega Cheese executive general manager – ingredients Mark McDonald said global commodity prices were softening.
“Global incomes are an issue now,” he said.
One of the key drivers of global incomes was oil prices, which at US$30 a barrel were now well below the cost of production, which was having a huge impact on oil-producing countries, including in the Middle East and Russia.
Global milk production was growing at 1-1.5 per cent, which in a normal world would be a contraction of supply relative to demand, but in the current environment, demand was difficult to forecast.
“It will be an unsettled period for the next 6-12 months,” Mr McDonald said.
Saputo president and chief operating officer Kai Bockmann told a briefing last week downward pressure on global commodities was having an impact on its Australian business, while lower oil prices were affecting demand from the Middle East.
But both companies are seeing improved signs from the Chinese market.
Mr McDonald said there had been some delays due to tight capacity in Chinese ports but these were sorting themselves out.
Mr Bockmann said there had been some softness in China and South-East Asia due to lockdowns in countries there.
“But the good news is that we are starting to see the Chinese ports and transport in that country slowly getting back to normal,” he said.
“So we anticipate that those markets like China will pick up steam as we start to enter the second and third quarter of our fiscal year.”
Mr McDonald said it was paramount that borders remained open to allow trade to continue.
“Because while Australia has a very strong domestic industry, which is wonderful, it also relies on exports, and to a degree imports, to support the consumer and the farmers themselves,” he said.
Both companies are reporting changes in product mix.
Saputo, in its global briefing, reported an increase in demand for retail products but a decline in food service and industrial markets across its operations worldwide.
Mr Bockmann said in Australia there had been a surge in demand for longer shelf-life products such as UHT, powder, everyday cheese and chilled milk.
Food service is a smaller part of Saputo’s business in Australia, but demand in that sector was soft.
Mr McDonald said food service was slower but Bega was fundamentally a retail food business in the domestic market and was seeing strong demand for one-kilogram block and sliced cheeses, while cream cheese sales and infant formula into Asia were still going well.
Bega was focused on business continuity – both in terms of planning how to manage potential interruptions and in keeping in touch with existing customers, he said.
It was also committed to picking up milk from its suppliers and had plans in place should it have to close a plant.
“We have enough capacity to manage our milk across a number of multiple plants – we are in a very fortunate position,” Mr McDonald said.
Saputo is ramping up production in its plants producing retail goods and switching some of its other factories to making longer shelf-life products, but is keeping a close eye on the evolving situation.
But its chief executive officer Lino Saputo said the company could be left with inventory, if it could not repurpose some of its food service items that were getting close to the end of their shelf life.
The company would attempt to get this stock to foodbanks.
Mr Saputo said the company was also committed to collecting 100 per cent milk from its contracted suppliers.
But in some places, it was no longer taking milk from other sources.
Mr Saputo said the company’s strong balance sheet meant it was well placed to weather the COVID-19 outfall.
There might be opportunities for further mergers or acquisitions for the company as a result.
Although noting there might be opportunities in Oceania, Mr Saputo ruled out the likelihood of those being in Australia.
Any further acquisitions in Australia would be reviewed by the Australian Competition and Consumer Commission, and might not be viewed favourably, he said.
The coronavirus is setting the dairy industry back, forcing some farmers to drain surplus milk.
“I am doing everything in my power to become more efficient to try and prevent me from having to dump any milk,” Kyle Hemmersbach said.
Hemmersbach hauls dairy, and while he hasn’t had to drain any milk yet, he said the plants he works with are equipped to handle packaging for restaurants, rather than retail.
“We are coming into a problem where they are just not able to produce anything because they are not able to package it for where the demand is right now,” Hemmersbach said.
Hemmersbach said dumping one load can be between $8,000 and $10,000, depending on the size, and that price has been dropping over the past couple of months because of the coronavirus.
“When prices fall far enough, you’re losing money every time you turn the milk pump on to milk the cows,” Hemmersbach said.
Dairy Farmers of America Vice President Kristen Coady said the sudden changes in demand is forcing manufacturers to cut or change production.
“This, in combination with the perishable nature of our product, has resulted in a need to dispose of raw milk on farms, in some circumstances,” Coady said.
Dairy Business Association Executive Director Tim Trotter said all aspects of the dairy industry need to work together to survive this.
“I am confident we can, but we need government support. We need their buy in and solutions that are really looking at, you know, getting nutrition to the people who need it more,” Trotter said.
Trotter said dollars have already been allocated for the purpose of paying farmers during the crisis, but now it’s about quickly building a program with the United States Department of Agriculture to do that.
Hemmersbach said he doesn’t believe a solution can be found that easily.
“The dairy industry will never be the same,” Hemmersbach said.
Those working with the USDA said meetings are happening frequently to find solutions.
Q106 Farm Director Pam Jahnke said consumers can help out as well by purchasing as many dairy products as they can afford to, especially those products that are local to Wisconsin.
A farmer and his pregnant wife are devastated after being abused online by vegans for delivering dairy products to the elderly and vulnerable self-isolating during the coronavirus pandemic.
Activists sent abusive messages to Chris Wilson’s farm business Facebook page, Streamvale Open Farm, based in County Down, Northern Ireland.
In a video appeal, Mr Wilson urged a group of vegans to stop sending him and his pregnant wife, Helen, abusive messages online.
He said: “I have been up since four o’clock this morning looking after our animals, caring for our sheep, and making sure our lambing is going OK.
“I was out early this morning delivering dairy products to vulnerable people, out on the road since half four and we will probably be working right through to 10 o’clock tonight.
“I’m not saying that because I think I’m doing anything special – there’s plenty of nurses and doctors doing far more than me.”
Mr Wilson explained that his wife, Helen, who runs the company’s Facebook page, was at home feeling “devastated” after coming under attack from vegans, who believe that what they are doing is wrong.
“I just don’t think it’s right,” said Mr Wilson. “She’s sitting there worried because of the comments people are saying, how cruel we are and how dare we be delivering dairy products.”
Mr Wilson described accusations of them “marking a sheep with paint, so we know if it’s a twin or a single is cruel, and how we are going to slaughter these lambs at Easter”, as “just unbelievable”.
He said: “I have no issue if you’re a vegan, at all. And plenty of people have different dietary requirements for different reasons.
“But that’s your choice. We are doing our best to survive ourselves through this and just to be slated online has just really p*ssed me off.”
He added: “I’m upset for my wife, who is feeling very anxious over the whole thing, and I don’t think it’s fair. If you’re a vegan, I have absolutely no issues with that, but don’t feel the need to come on and bombard us with messages. I’ll just leave it at that. Let us do what we do, and you do what you do.”
Streamvale Open Farm is a family farm that officially opened its doors to the public in 1989. Visitors can see cows being milked, and lambs, goats and rabbits being fed throughout the day. The farm is currently temporarily closed to the public because of the coronavirus pandemic. The family has been farming the land for more than 100 years and it is still a working dairy farm.
Seven tips to deal with vegan activists
The Ulster Farmers’ Union (UFU) says farmers are reporting they are increasingly coming under attack on farms and it has issued the following advice to members.
If you do come across extremists on your farm or have suspicions they may have been on farm:
Be aware they may be live streaming the encounter.
Calmly and politely ask them to leave.
Call the police and alert them to their presence or log the incident if they have left.
Inform the UFU, your processor, and quality assurance scheme (they may wish to organise a spot visit of the site).
Gather your own photo or video evidence of faces, car registrations, and any damage caused (this will be useful if you wish to attempt to prosecute them and for industry intelligence).
Check the site and other sites for hidden cameras.
Consider suspending social media accounts if picked up by the press.