COVID-19 has huge impact on dairy industry

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What would have been good news in any other year for San Joaquin County dairy farmers in March became less of a blessing and more of a curse as the COVID-19 pandemic arrived just as too much milk and too much cream remained on the market and dairy farmers were being asked to slow production. The contradiction wasn’t lost on veteran dairy farmer and past SJFB President Jack Hamm.

“With this pandemic, it’s been insane,” he said. “Last year I could comment on specific things about our industry but this year… everything’s chaotic.”

Pandemic pushback

The reaction to the pandemic – restaurants closing, schools shutting down and, ironically, a run on dairy products by consumers that emptied grocery store shelves – has, according to Dairy Institute of California economist Bill Schiek, caused the sale of dairy products to “really tank.”

Demand for cheese, cream, butter and other dairy products declined and, he said, “Processing and manufacturing plants aren’t willing to make products for a market that isn’t there, especially if those products don’t store very well.”

“Our dairy is an industry that could use a break,” said SJFB Executive Director Bruce Blodgett. “One week cull cows are up, the next their demand has plunged. We could use stable and good prices for dairy products. The government’s aid programs are helpful but they’re no panacea.”

Hamm pointed out that block cheese “dropped 70-cents in a week and came back 90-cents the next. Prices on all milk classes is down to levels I haven’t seen in a decade. It’s a disaster for all dairy products and there’s a lot of pain out there.”

The problem is packed with irony that Sarina Sharp, a market analyst based in Michigan describes as “…simply too much milk and too much cream that can’t be made into other storable dairy products – powder, butter and cheese – fast enough.”

“All of this couldn’t have happened at a worse time,” said Lodi dairy farmer Hank Van Exel.

Dairy farmers have dried some cows, culled others and adjusted feed rations to lower production and bring balance to the supply and demand situation but the forces currently controlling dairy products and sales continue to push negatively.

Bank analysis

CoBank, a member of the Farm Credit System, said in its latest quarterly report that COVID-19 has “underscored the critically important nature of agriculture… to rural America.”

“This quarter will largely define the next year in terms of the economy and how severe the damaged caused by the coronavirus will be,” said Dan Kowalski, CoBank vice president, Knowledge Exchange. “The economy had been on good footing and it’s entirely possible that we can get back to reasonable strength within a few quarters.”

Hamm said some aspects of the chaotic dairy price realm – “We don’t know what to expect from one week to the next” – will depend on beef prices. “Beef’s down now but cull prices are now up.” The hope is that both will stabilize favorably for the industry.

Issues all dairies face

The dairy industry has been experiencing a double-dip of negativity in domestic sales, supply chain disruptions – although the chain remains functional – and declining global markets.

Agriculture – and dairy – remain an essential link in the food chain and the problems confronting the industry weren’t caused by a lack of production but real-time issues.

Dairy farmers are evaluating, recovering and responding to new challenges while at the same time running their operations and readying preventative measures for the future.

Some dairies could fold

Until shipments of dairy products resumes to the re-opening marketplace some operations will hover on the brink of closing down, despite government aid.

Some industry experts say transportation issues are hampering the industry due to not enough truck drivers and shelf stockers; others point out that prices have to improve before any dairy renaissance can take place. With Class III milk – used for cheese and whey – crashing from $20 per cwt to less than $12 per cwt as, according to Hamm, all classes of milk have fallen, many dairies might not survive the plunge.

Positive aspects

“As far as I know there’s been no milk dumping in San Joaquin County, or at least very little,” Hamm said. “But when you see it dumped elsewhere it makes you crazy.”

During this “spring flush” “Our cows have had a great spring,” Hamm said. “Dairy farmers are still striving for sustainability which is something that will help us get through this wild time.”

He said, “I don’t think we felt the ‘stay in place’ deal as much as other industries because in dairy you have to do what’s necessary every day. We were already staying in place.”

Hamm said Farm Bureau dairy farmers are educating their workers about all aspects of COVID-19 and encouraging strong leadership and effective communication, all part of what’s needed while working on dairies.

Constants, comments

“We’re always trying to be optimistic about the ultimate positive result from all of this,” Blodgett said. “We’re doing our part and it’s time for the state legislators to do theirs and suspend all rule making and new regulations for the duration of the COVID-19 pandemic. It’s time to work together, use common sense and concentrate on winning the pandemic battle instead of pushing through regulations.”

“Dairy farmers and workers, despite health concerns, continue to work around the clock,” wrote Jim Mulhern, CEO, National Milk Producers Federation, in “Hoard’s Dairyman”. “The dairy industry must be united…in the months and weeks ahead, as the entire dairy community faces a challenging outlook together.”

“The coronavirus has insinuated itself into everything and we’re fighting it on all fronts,” Hamm said, “Studies about vitamin-D and the coronavirus indicate that vitamin-D is an effective virus fighter. I think milk should be pushed as a provider of vitamin-D.”

Farm Bureau dairy farmers are used to standing up to bureaucrats, unnecessary regulations, strange mandates, politicians, a phalanx of government agencies and now COVID-19. Considering what they’ve already faced, dairy farmers will outlast this pandemic too.