COVID-19 boosts dairy sales, but concerns remain for the industry

Farm & Dairy

“A lot of bottlers have never seen sales so good as what they’ve seen here in the last week or two,” National Milk Producers Federation’s Chris Galen told the Dairy Radio Now program

Milk industry booming amid COVID-19 outbreak

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(FARM AND DAIRY) – As the world around us continues to change, seemingly by the minute, there is one constant. Dairy cows will keep producing milk.

That’s a good thing because the demand for fluid milk — half gallons and gallons — at retail outlets surged after the COVID-19 outbreak hit the U.S. Although there’s not yet data to show this, there’s a lot of anecdotal evidence.

Empty shelves in grocery store milk coolers aren’t a sign of a shortage, just an incredible demand.

“A lot of bottlers have never seen sales so good as what they’ve seen here in the last week or two,” National Milk Producers Federation’s Chris Galen told the Dairy Radio Now program, March 18.

Scott Higgins, chief executive officer of Ohio Dairy Producers Association, said he knows of some cheese manufacturers that diverted their milk deliveries to fluid milk processors to help them meet the demand.

Some processors with schools as their primary customers were able to adapt quickly. Processors shut down lines producing half pints of milk and ramp up production of half gallons and gallons of milk, said Brian Wise, chief of the Ohio Department of Agriculture’s Dairy Division.

“The dairy industry has a tremendous ability to adjust on the fly,” said Wise.

In Pennsylvania, they’ve also seen the retail milk boom, but the school closures may have created some temporary supply chain issues for those processors.

“Those processors are seeking outlets for their bulk raw milk in storage, possibly from cooperatives,” said Carol Hardbarger, executive secretary for the Pennsylvania Milk Marketing Board, “Other processors are seeking relief in being able to sell over supplies of half pints which were processed for sales to schools.”

The Pennsylvania Milk Marketing Board regulates milk prices in Pennsylvania at the producer, wholesale and retail levels. The board voted, on March 20, not to enforce minimum prices on half pints of milk. That will allow processors to reduce inventory and change production to gallons and half gallons to meet the higher demand.

The downside

Will the demand for fluid milk in grocery stores make up for the decreased demand from schools and restaurants that were forced to close suddenly, due to the spread of COVID-19? Time will tell.

It’s just one of the many challenges dairy farmers are facing in this new drama that continues to unfold. As 2020 began, milk prices looked promising. But in March, milk prices began to fall. The April Class III milk futures were sitting around $16 per hundredweight, according to the Chicago Mercantile Exchange.

“Break even is around $18,” said Jayne Sebright, executive director for Pennsylvania’s Center for Dairy Excellence.

Milk prices aren’t the only concern. While farmers and dairy manufacturing plants are considered essential businesses and continue to operate, employers have the task now of making sure their employees stay healthy. An outbreak of COVID-19 among the staff at a dairy plant could disrupt the milk supply chain, Sebright said.

Farmers are also concerned about getting different supplies they need to keep running smoothly, Sebright said. Nitrile gloves that are in high demand in the healthcare industry are also used when milking cows.

Pennsylvania Gov. Tom Wolf ordered non-life-sustaining businesses to close physical locations, by 8 p.m. March 19, and initially called quarrying and wood product manufacturing non-life-sustaining. That had farmers wondering how they’d get sand or sawdust for bedding.

The order was later revised and allowed businesses to ask for waivers. But it brought up concerns about how farmers would could get necessary supplies to keep these essential businesses going.

[The Center for Dairy Excellence put out extensive guidelines to help dairy farms navigate COVID-19.]

The upside?

Even with decreased need for half pints of milk, there is still a need for dairy products at schools.

Many school districts are packing lunches to-go and getting them to students by curbside drive-through at school buildings or delivering them by bus. So, instead of bulk products, schools need prepackaged, single-serve items like yogurt cups and cheese sticks, Higgins said.

The American Dairy Association Mideast equips schools with cooler bags for classroom breakfast programs. Schools have ordered more cooler bags to house dairy products while getting packed lunches out in the community, Higgins said.

“We’re trying to be creative in a time of crisis,” he said.

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