by Sally Colby

On a recent call held by the Center for Dairy Excellence, several dairy leaders shared information and answered questions about the impact of COVID-19 on the dairy industry. Pennsylvania Department of Ag Secretary Russell Redding opened the session by expressing gratitude to all who are assisting farmers.

“COVID-19 continues to invade our lives, our habits, our relationships, our markets,” said Redding. “We’ve all been reminded of agriculture’s role in state and national security in these times. Maintaining access to food is foundational to national security.”

Jennifer Huson, senior director of marketing, Dairy Farmers of America (DFA), noted everyone is aware of the impact of COVID-19 on dairy markets. “The dairy industry as a whole is being stressed,” she said. “We are experiencing a change in demand for dairy products. On the demand component from a domestic standpoint, there are two key factors: the demand from the retail side (grocery stores) and food service (restaurants, schools).

“Initially, we saw a strong demand at grocery stores as more people were preparing for stay-at-home orders,” she continued, adding that much of that activity was panic buying. “That includes dairy products such as fluid milk and cheeses. At the same time, food service demand for dairy products purchased through restaurants and schools dropped off significantly as those channels closed or went into restricted hours.” She noted consumers are consuming dairy in a different manner, and not at the same rate as when they were able to go to restaurants. Additionally, some facilities that were producing products for restaurants, colleges and schools have changed their production models.

Huson said the overall result is a decrease in demand for dairy – approximately 12% – 15% nationally. “Those demand changes are resulting in a lot of uncertainty, and also forcing some dairy manufacturers to cut or limit production,” she said. “Some manufacturers are being challenged by workforce shortages – that also plays a role in production schedules.”

Huson said DFA is working to ensure members’ milk is picked up. “We’re working with the federal government to explore different options to offset farmers’ losses resulting from the decreased demand and decrease in milk prices,” she said. “At this point, we’re working with customers and food banks across the country to explore the options for donations that would allow these plants to continue to operate.”
There is uncertainty on the consumer side, including questions related to limitations and grocery store demand, and Huson said the industry is working to eliminate limitations on dairy purchases.
“We’re seeing a lot of different components leading to this unprecedented situation,” said Huson. “We continue to work for an option to retain as much value for farm families’ milk and to increase demand for dairy. We’re also looking at all possible avenues to find a place for milk.”

Jill Smith, Cornerstone Human Resource Management Consulting, discussed updates on labor laws affecting dairy farms and small businesses. “State and federal governments have enacted a number of relief provisions for employees,” she said. “The Family First Coronavirus Response Act (FFCRA) became effective on April 1. It provides paid sick and extended family medical leave for employees for reasons related to COVID-19. This is only in place until the end of this year – it’s a temporary benefit.”

The act applies to employers with fewer than 500 full- and part-time employees, and includes employees provided by temp staffing agencies but excludes independent contractors. During the leave time, health benefits for employees must be continued. “You get a tax credit,” she said, “for both the pay under this act as well as the cost of benefits for the employee.”

Employees who want to take advantage of the FFCRA must provide documentation. Additional details on the act are available at dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave.

Zach Myers, risk education manager at the CDE, explained how recent events have affected milk marketing. “Milk and dairy products continue to be traded on the CME,” he said. “Dairy revenue protection policies are available, as are traditional milk price forward contracts through co-ops and private brokers.” Myers encouraged producers to use this time to develop a relationship with an insurance provider who offers Dairy Margin Coverage and to become familiar with the program in order to take advantage of DRP (Dairy-RP) once prices become more favorable.

Dave Swartz, Penn State Extension, discussed the potential for exploring development of on-farm processing that might be suitable for some dairy farms. Swartz said Extension is working with the CDE on risk management programs. Penn State Extension is offering free online courses during April including milking management, training employees and on-farm culturing for milk quality (at extension.psu.edu/animals-and-livestock/dairy).

Swartz said Penn State has been working with the University of Wisconsin to develop guidance for producers applying milk to land, either directly or as a component of liquid manure.
“Milk is a nutrient-dense product,” said Swartz. “It has fertilizer value – for every 1,000 gallons of milk, you get 44 pounds of nitrogen, and lesser amounts of phosphorus and potash.”

Farmers should be aware of the need for increased stream setbacks when applying milk or blended manure directly to crop ground. “Because it’s nutrient dense, milk has high biological oxygen demand, which will cause more damage to aquatic life if it gets to a stream because of a storm event,” Swartz said.

Another potential issue for farms applying milk to crop ground in close proximity to residential areas is the creation of a significant odor problem. “Incorporation, if possible, is best,” said Swartz, “or apply it in areas where there won’t be neighbors who smell the milk.”

As to whether milk or milk/manure combinations can go directly into on-farm methane digesters, Swartz said many digester manufacturers do not recommend incorporating milk into a digester. “It changes the population of the bugs that are doing the work in the digester. We’re recommending to not do that unless the manufacturer of the digester gives you the go-ahead for that.”