There was a large concern for the dairy industry in March. Students were released from schools, and several food industries closed because of COVID-19.
“I think it is a surprise to a lot of people that half the cheese in Wisconsin moves into foodservice channels, the restaurants, the schools, the hotels and destinations around the country and around the world,” John Umhoefer, executive director of the Wisconsin Cheese Makers Association said.
Although 2020 was expected to be a decent year for dairy markets, the pandemic pushed prices down. There was a sharp turnaround after the Wisconsin Supreme Court ruled to strike down Gov. Tony Evers’ ‘Safer at Home’ order.
“There was a big spike,” Umhoefer said. “We saw the real marker for the cheese industry, the block cheddar price at the Chicago Mercantile Exchange, jump up by 57 cents by May 15. That’s an enormous jump in one week.”
Umhoefer was pleased to see the pipeline refill into the foodservice industry with orders coming back that had disappeared from chain restaurants and hotels. As they began to restock, the market reacted immediately to product being pulled off shelves.
“I think we are on a bit of a roller coaster,” Umhoefer said. “I think you will see stocks replenish around the country, and then you’ll have a low again because that food has to be eaten. We are going to see the market ebb and flow as people get back into the swing of dining out.”
The COVID-19 restrictions impacted big and small cheesemakers as some relied entirely on restaurants or farmers markets for sales.
“Those outlets having been gone for a couple of months was really devastating on that side, but we did see a resurgence in web sales and a lot of effort from people to share what they saw posted with hope it would keep some of our cheesemakers alive and kicking through this,” Umhoefer said.
Umhoefer did note a silver lining. In addition to foodservice coming back, retail sales have been strong for dairy in the past several weeks.
“It makes sense,” Umhoefer said. “When people couldn’t go out to eat, they were cooking at home and really buying dairy products.”
He said natural cheese was up 22 percent in sales, butter was up 32 percent, and fluid milk is the bottom was up 11 percent. Overall, retail sales of dairy increased by 16 percent compared to last year.
“Perhaps you form some new habits,” Umhoefer said. It would be great to see people using butter all the time at home and using more cheese in their cooking, getting back to having that glass of milk. Hopefully, we can get a gain out of retail and see restaurants come back as well.”
Umhoefer added there has been strong demand for dairy overseas as well, showing optimism in another market for Wisconsin dairy.