‘Hard-hit’ dairy producers struggle despite surging sales of milk, cheese & butter during pandemic

By Elizabeth Crawford contact

- Last updated on GMT

Source: Getty
Source: Getty

Related tags: coronavirus, COVID-19, Milk, Cheese, Dairy

Despite surging sales of milk, cheese and butter as consumers pantry-stock and prepare more meals at home amid the ongoing coronavirus pandemic, dairy producers are struggling as prices at the farm gate have plummeted, major markets have evaporated and processing facilities have not yet adapted to new market demands, according to industry stakeholders and analysts.

In several ways, the experiences of shoppers seeking dairy products and those of farmers and suppliers producing them have been at far ends of the same spectrum since the threat of coronavirus prompted many schools, restaurants and universities to shutter in response to government pleas to shelter at home.

In retail stores, demand for dairy has steadily increased with sales up 60% for the week ending March 22, according to research from 210 Analytics LLC. This is up dramatically from the 1.4% sales increased during the first week of March, when early calls for social distancing and increased hand-washing began.

Within the dairy aisle, demand for natural cheese increased the most at 73.8% during the week of March 22 compared to the same time in 2019, according to the report from 210 Analytics. Citing data from IRI, the report also notes that sales of milk increased 47.5%, yogurt is up 21.5%, butter 111.8%, cream 43% and processed cheese 111.2% during the same period.

This increased demand, however, is not enough to make up for lost food service and restaurant dairy demand, according to the American Farm Bureau Federation.

In an April 3 release, the federation explains that the unexpected and sudden shuttering of schools, restaurants and universities that were among the main purchasers of milk and milk products left dairy farmers with far more milk than plants can process – which explains in part shortages of the products at retailers.

This shift and reduction in demand led to a 26% to 36% drop in price forecasts for dairy in the past month, according to AFBF. It also compounds an already difficult situation in which many dairy farmers and others were suffering economic damage from ongoing trade disputes.

A plea for help

Given the severity of the dairy segment’s struggles, AFBF urged the US Department of Agriculture in an April 3 letter to “turn its attention as quickly as possible”​ to “sectors particularly hard-hit,”​ including dairy.

“With congressional approval of $14 billion to replenish the Commodity Credit Corporation (CCC) and $9.5 billion for livestock, specialty crops and other growers, producers cannot wait”​ for financial assistance, AFBF President Zippy Duvall wrote in the letter addressed to USDA Secretary Sonny Perdue. “We urge you to set the highest priority on getting these critical dollars to farmers’ and ranchers’ hands absolutely as soon as possible.”

While Duvall acknowledged that “all sectors of agriculture must be included under CARES coverage implemented by USDA,”​ he said “certain sectors of agriculture are particularly hard-hit”​ and need of assistance as quickly as possible.

Among these are dairy producers, who have already experienced sharp price declines in recent weeks and likely will see them drop farther at the farm-level “due to price re-blending to account for distressed and disposed loads of milk.”

Creative solutions for an unprecedented situation

To help ameliorate the situation for dairy farmers, AFBF asked USDA in the letter to creatively support the sector, such as by crafting special direct payments to dairy farmers, ensuring that any milk disposed or dumped counts towards the Dairy Revenue Protection policy holder’s total milk marketing, and activating a milk loss program similar to the 2019 Wildfires and Hurricanes Indemnity and Milk Loss Program.

It also calls on the government to find new markets for the industry.

“To offset the decline in demand in the food service and school meals sectors, USDA should immediately make purchases of dairy products, including but not limited to fluid milk, butter, cheeses and dry milk powders. Additional support could be provided through export assistance programs and direct commodity support,”​ according to the letter.

It also suggests that school lunch programs still in operation be allowed to purchase whole milk, and asked the agency to create a voucher program through the Milk Donation program “to facilitate the distribution of donated milk through grocery stores and other venues since some food banks are not geared for highly perishable products.”

Finally, it asks USDA temporarily to increase the minimum milk solids content in fluid milk to more than 8.25 solids-non-fat and more than 3.25 percent butterfat for whole milk.

Recognizing that the impact and mitigation of COVID-19 is an “evolving, dynamic situation,”​ AFBF tells USDA in the letter that it “stands ready to partner” ​with the agency, which it notes is “doing a tremendous job supporting American agriculture in this crisis.”

As such, Duvall promises to share with the agency new insights as they develop so that together they can ensure farmers and ranchers “get the help they need in these unprecedented times.”

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