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Picture dire again for dairy farmers due to COVID-19

Cheese sales hit hard as U.S. foodservice sector comes to complete halt.

Photos of dairy farmers dumping milk surfaced on social media last week, just a couple of weeks after many had reported receiving letters from their dairy cooperatives explaining that they may have to do so due to COVID-19. While demand initially picked up for many dairy products as consumers hustled to get food, that has now changed. This situation, combined with the decline in foodservice business, has led to a milk surplus.

Dairy Farmers of America (DFA), the largest dairy co-op in the country, said the uncertainty and unprecedented situation due to COVID-19 is causing demand for dairy products to change.

“While we initially saw increased demand at grocery stores as consumers stocked up on many products, like dairy, in anticipation of shelter-in-place orders, the retail demand has now dropped. For this reason, we anticipate that milk will be more readily available at grocery stores in the coming weeks. Also, during this time, foodservice sales have rapidly declined due to schools and restaurants closing, which has resulted in an overall surplus of milk,” DFA vice president of corporate communications Kristen Coady said.

These sudden changes in demand, Coady explained, are forcing some dairy manufacturers to cut or change production schedules or build inventories. As such, some farmer members have been asked to dump milk.

“Due to the excess milk and plants already operating at capacity, there is more milk right now than space available in processing plants. This, in combination with the perishable nature of our product, has resulted in a need to dispose of raw milk on farms, as a last resort,” she said.

The farmers will be paid for the milk they have to dump, but payments will be affected by the current situation.

DFA relayed that it continues to work with its customers to explore additional options and exhaust all possible avenues for their milk. Additionally, it is working with customers and food banks across the country to explore donation opportunities that would allow plants to continue operating while servicing those in need of dairy products.

“Cows have to be milked; we do have an overproduction of milk right now,” Adam Reed, a dairy farmer from Reed Dairy in Idaho Falls, Ida., noted during an American Farm Bureau Federation call Friday, adding that the situation “will turn into a real hardship” for him and his fellow dairy producers if product can’t be moved.

In a letter to its members, cooperative Foremost Farms said in addition to possibly needing to dump milk, farmers may need to consider “a little extra culling of your herds.”  

John Umhoefer, executive director of the Wisconsin Cheese Makers Assn., said, “The dairy supply chain is challenged at a level never seen before. The cheese industry has lost a great share of its largest market. Nearly half of all cheese sold in the United States moves through foodservice channels, while one-third is sold at retail grocery stores.”

With milk cows producing more milk in a mild spring, dairy exports falling worldwide and dairy productivity challenged by the need to keep the workforce safe, he said the dairy industry “has an unprecedented challenge to find markets for milk.”

Additionally, commodity dairy prices have plummeted and will result in milk prices falling lower than many farms can handle to sustain long-term viability.

The Wisconsin Cheese Makers Assn. and many other groups representing dairy farmers and cooperatives in the Midwest sent a letter to the federal government urging it to provide direct assistance to farmers and to expedite the purchase of additional dairy foods.

In a letter to the U.S. Department of Agriculture, the groups wrote, “Direct relief to dairy farmers and a substantial purchase of dairy commodities by USDA can ensure our industry will remain fiscally able to function in its primary role of feeding the nation and the world.”

The letter was issued jointly by the Dairy Business Assn., Cooperative Network, Edge Dairy Farmer Cooperative, Professional Dairy Producers of Wisconsin, Wisconsin Cheese Makers Assn., Wisconsin Farm Bureau and Wisconsin Farmers Union.

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