Every day, US dairy farmers are forced to dump as much as 3.7 million gallons of fresh milk — even as grocery stores report milk shortages and millions of jobless Americans go hungry. The disconnect is due to unprecedented disruptions in the supply chain.
Our packaging and trucking partners don’t have the capabilities to immediately reroute milk, cheese and other dairy products from restaurants and schools to grocery stores or food banks. But cows still need to be milked twice a day, and farmers only have limited storage facilities. So they have no choice but to dump millions of dollars of milk.
Unfortunately, the crisis could soon worsen. Without long-term federal relief, dairy farmers won’t be able to stay afloat.
Covid-19 has sent shockwaves through nearly every industry. But the dairy sector is particularly vulnerable, for three reasons.
First, dairy products are highly perishable. Second, since under-milking signals their bodies to halt production, cows must be milked every morning and evening — regardless of whether buyers are capable of taking delivery. And third, cows produce milk at the fastest rate this time of year, since many cows give birth in late winter and spring pastures are high in nutrients. This triple-punch has left farmers with an unanticipated milk surplus and no place to store it.
As Covid-19 caused consumers to panic purchase milk, many retail outlets struggled to keep milk in stock, and some stores limited how much customers could buy. Yet, we can’t sell the milk directly to them.
It’s just not that simple. The trucks that transport milk to retail locations are already operating at full capacity. And establishments like food banks and homeless shelters can’t take excess milk, as they aren’t prepared to handle high-volume deliveries.
Similarly, packaging dairy products for retail use is a much different process than packaging it for schools, restaurants and other high-volume buyers, many of which have been shut down during the pandemic. Producing the eight-ounce bags of shredded cheddar that grocery stores sell — instead of the 10-pound bags that restaurants purchase — would require retooling an entire processing plant. That million-dollar endeavor would be difficult even without a pandemic going on.
Given these supply chain woes, a growing number of farmers have little choice but to dump their milk. But if this continues much longer, many farms won’t survive. Between 2014 and 2019, milk prices declined by nearly a quarter, forcing many farms out of business. Between 2003 and 2019, the number of dairy farms fell by more than 50%. And between 2018 and 2019, the nation lost over 3,280 farms, the largest annual decline in 15 years.
Surviving farms had high hopes for 2020, but then Covid-19 came along and crushed demand. At the height of the pandemic, milk prices had fallen nearly 50% since Thanksgiving. As restaurants open up, prices are slightly rebounding, but farmers are still grappling with low demand and years of low prices.
Making matters worse, the US Department of Agriculture sets raw milk prices directly. So farmers are the only ones in the dairy supply chain who can’t adjust their prices based on market conditions.
Thankfully, the USDA is providing some temporary relief through direct payments to dairy farmers to help offset this year’s losses. The agency has also committed to purchasing hundreds of millions of dollars of dairy products throughout the rest of the year. Finally, the USDA is providing farmers $19 billion in aid via Congress’ $2.2 trillion economic aid package.
These efforts are worth celebrating. Yet temporary programs and one-time payments won’t be enough to keep this industry alive. Especially since farmers won’t receive any stimulus money until later this month. Many farmers are already facing bankruptcy, and Vermont’s Secretary of Agriculture, Food, and Markets predicts Covid-related financial woes could last into the fall. What’s needed is a relief package that offers long-term support to dairy farmers.
For example, the USDA could adjust milk prices by region to take Northeastern farms’ higher production costs into account. Dairy farms in New England and the upper mid-Atlantic generally have to ship fertilizer from the Midwest. They also pay higher land and insurance costs. Yet they are invaluable to their local communities, since transporting milk from the Midwest would compromise freshness.
Today’s dairy farmers have proven their industriousness by surviving years of low milk prices. Our farmers serve as the backbone of our rural communities and the stewards of our land. But Covid-19 poses an unprecedented threat — and farms will need help from the USDA and Congress to weather this crisis and continue providing fresh, healthy food to US communities.
Ed Townley is CEO of Cabot Creamery Co-op. The opinions expressed in this commentary are his own.