by Courtney Llewellyn
Sadly, what we’re seeing happening today is a case of history repeating itself. In the 1930s, with citizens across the nation starving in bread lines, farmers were forced to burn excess wheat for fuel – and dump milk they couldn’t sell. The issue is in the supply chain, not in a lack of supply or a lack of consumers.
The Southwest New York Dairy, Livestock and Field Crops Program recently reassured consumers there is no reason to fret regarding the safety of the food system or threats of food shortages. This has been supported by the Institute for Food Safety at Cornell University. However, it will take time to balance out the issues currently disrupting the supply chain.
“Milk is a challenging and perishable product to produce and prepare for sale. As one of the most regulated food products in our country, there is a limited amount of time between milk leaving the farm in large tanker trucks to when it’s made into a final product,” explained Katelyn Walley-Stoll, farm business management specialist, and Alycia Drwencke, dairy management specialist, with the SWNY Dairy, Livestock and Field Crops Program.
According to the SWNY team, facilities that transform raw milk into a product which can be sold in stores are currently backed up, operating at full capacity to catch up with the rush of orders from supermarkets. Milk is sold domestically to wholesale buyers (restaurants, schools, coffee shops, etc.), retailers (grocery stores) and is exported. But export levels have dropped. Wholesale demand has decreased by an estimated 60%. At the retail level, demand has increased up to 40% in supermarkets and grocery stores – but this increase isn’t enough to balance the market. The National Milk Producers Federation (NMPF) estimates that milk supply is exceeding demand by at least 10%.
Cheese, yogurt, evaporated milk and ice cream require additional time and costly infrastructure to produce. Milk plants and production facilities set up to make 50-pound bags of shredded cheese can’t quickly convert to packaging one-pound bags for retail. Fluid milk plants producing cartons or large bags of milk for schools and other institutions can’t easily switch to bottling one-gallon containers.
Dumping is the last resort. If there isn’t a buyer for the milk right away, the only alternative is to dispose of it properly.
Finding a buyer
“We watch the news like everybody else and see this paradox of milk dumping – but then there’s a shortage on the shelves when you go shopping,” said Neil Messick of Messick’s Farm Equipment in Elizabethtown, PA. “One of our secretaries asked ‘Why don’t you go try to buy some milk?’ We thought it was a great idea to help our employees and community – a win on so many levels.”
Messick said it was “surprising how easy it was” to find milk to purchase. “We all make an assumption that dairy supply chains are so complex that little can be done. You wouldn’t expect to just call up a dairy and buy 500 gallons when shelves were empty.” They called a local processing facility and within minutes scheduled those 500 gallons to be processed. The entire process only took a few days.
“We hope this is an encouragement to others – it literally took me three minutes,” Messick said. The processor they worked with usually does products for retirement communities and schools, and their typical customers are the ones hit hardest. “It was baffling – the supply is so readily available, so why not utilize it? This processor had called grocery stores six, seven hours away to try to sell the milk with no luck.”
Once the milk was processed, most of it went to employees of Messick’s. The rest went to the community. “It’s easy to find needs when you start looking. The excess (150 gallons) went to two community food banks, both of which had little supply.”
Many have asked why the milk being dumped can’t all go to food banks. The raw product from farms has to be bottled first. This is a costly process, and there is currently no extra capacity at existing facilities to bottle milk, for donation or sale, that would have been dumped.
Messick added, “There are a lot of easy ways to keep supporting our farmers out there.” The easiest way is to keep encouraging people to buy dairy products.
(If you visit a retail store that is still limiting the purchase quantities of dairy products, take a picture, note the location, date and time, and it send to Beth Meyer at firstname.lastname@example.org, who is working on behalf of the American Dairy Association North East with grocery chains to improve the situation.)
The NMPF thanked the USDA last week for allowing discarded milk to be counted toward milk marketings for the Dairy Revenue Production (DRP) or as actual marketings for the Livestock Gross Margin for Dairy (LGM-Dairy) programs. That decision allows dairy farmers participating in those risk management programs not to lose coverage on any milk that can’t be marketed. It will also be helpful in mitigating some of the damage many dairies face due to supply chain disruption.
“The market realities of the COVID-19 era demand solutions, and USDA’s decision is a balm for thousands of dairy farmers participating in these important risk-management programs,” NMPF President and CEO Jim Mulhern said. “We commend USDA’s decision and look forward to discussing further actions that can provide immediate relief for all dairy farmers, as outlined in our joint plan developed with the International Dairy Foods Association that we sent to the department.”
To read the entire NMPF-IDFA plan, visit tinyurl.com/u78y4vd.
The NMPF-IDFA’s remedy asks dairy farmers to cut their production 10% during the next six months in exchange for a guaranteed compensation level on the remaining 90%. The Minnesota Milk Producers Association took it a step further and pitched their Dairy CORE Program, which preserves the best parts of the NMPF-IDFA plan (direct relief payments to producers) while “eliminating serious, baked-in flaws that threaten to undermine that effort’s success.” It would instruct the USDA to pay U.S. dairy producers $3/cwt for 100% of their March 2020 baseline, for April, May and June, irrespective of market prices. The payment would be made as a single lump sum in April.
According to Cindy Leitner, president of the Wisconsin Dairy Alliance (which is in favor of the Minnesota plan), the idea effectively resolves the issue of “regionalization,” or it does not unduly place burden of production cuts on half the nation’s dairymen because of their location. (Cows in the northern half of the nation produce much more milk during the summer months than those in the south.)
The Minnesota program does not condition direct payments on rigid, strictly uniform production cutbacks. It gives co-ops and milk buyers more discretion to manage inventory. “If creameries are assured their producers have received a large direct payment, they will be more empowered to implement situationally adjusted, effective marginal incentives to right-size their milk supply,” Leitner wrote.
And, instead of reopening 2020 signup for Dairy Margin Coverage or compensating processors for disposed milk, the Minnesota plan concentrates stimulus funds to a single, large lump sum paid directly to each U.S. dairy producer.
The USDA has $9.5 billion in discretionary funding to invest in dairy farming. That’s why the WDA is urging other dairy associations, industry advocates and lobbying organizations in other states to join in supporting the MMPA Dairy CORE Program. They ask you to contact your Congressional delegates and ask them advocate to the USDA in support of the Minnesota option.