April 26, 2020

Struggling with Wasted Product

Dairy Industry Struggles with Wasted Product Amid COVID-19

Restaurants, schools, colleges, and hotels closing due to COVID-19 have left farmers with millions of pounds of food they can no longer sell. Even though Americans are now making large grocery trips and eating most meals at home, this increase is not enough to absorb the loss of the products intended for schools and businesses. Dairy Farmers of America, the nation’s largest dairy cooperative, estimates that farmers are dumping around 3.7 million gallons of milk each day, and a single chicken producer is destroying 750,000 eggs every week.

“I think it’s fair to say the pandemic has been a gut punch to commodity prices across the board for American agriculture, but probably most significant for the dairy industry and dairy farmers,” U.S. Dairy Export Council chief executive officer and president Tom Vilsack said. “We’ve seen Class 3 milk prices decline by 26% [and] Class 4 milk prices by 36% in recent days -- a more significant drop than just about any other commodity has endured.”

The pandemic is especially severe in the dairy industry because cows have to be milked multiple times a day even if no buyers are available. “The issue for milk is you can’t turn off the cows,” said Daniel A. Sumner, an agricultural economist, and professor at UC Davis. Some farmers are creating new ways to save some of their products, such as Van Groningen, owner of New Hope Dairy in California, who told the Sacramento Bee, “We’ve diverted about 30 percent of our milk into more butter.” Some producers are even lobbying pizza chains to include more cheese on each slice, according to the New York Times. While this is helpful, creameries have told farmers to stop sending milk because they cannot find a buyer for it, says Anja Raudabaugh, Chief Executive of Western United Dairies. Raudabaugh also stated that almost every farmer in the California region has been told to cut production.

“Everyone across the industry is feeling distressed now,” Julie Sweney, spokeswoman for FarmFirst Dairy Cooperative told USA Today. “There is definitely a strain on markets now. The whole consumption rate for milk is so much different than it was before COVID-19,” Sweney continued. According to industry estimates, the closures have left farmers with 10% more milk than they can use. Dennis Rodenbaugh, executive vice president at Dairy Farmers of America, told The Wall Street Journal that 7% of the U.S. milk supply was dumped during the first week in April, and he anticipates that number to increase.

Dairy Farmers of America says its members will still be paid for dumped milk, although checks to all members will be reduced as the cooperative markets less milk overall. Major players in the milk industry sent the Milk Crisis Plan to the U.S. Department of Agriculture (USDA), urging the agency to take swift action to support the industry.