It is something that most every American can relate to — opening up a half-pint carton of milk to go along with a school lunch in the cafeteria. But COVID-19 is forcing the dairy industry to take a hit because closed schools and other bulk buyers, like restaurants, are not in need of dairy products.
“The disruption COVID-19 caused with restaurants and schools closing has impacted the demand for dairy products,” said Virginia Ishler of the Penn State Extension Dairy Team.
“At this time of year, more milk is being processed in half-pints for schools or bulk sizes for food service. Grocery stores make up a smaller percentage of product utilization and the product size is with the consumer in mind. … Our system is not very flexible in product utilization and grocery stores are not set up to handle bulk production.”
This explains the conflicting reports of there not being enough milk in stores, while some farmers are dumping milk.
“With more people at home and buying dairy products, that is why store shelves were bare — the shift in consumer consumption,” Ishler said.
And the increase in milk purchased at grocery stores did not come close to offsetting the lack of bulk product demand, said Ishler.
That disparity is being felt across Pennsylvania and the nation. With that extra supply, some processors have had to dump milk that is no longer able to be processed, but Ishler said the price per hundred pounds of milk that farmers are paid has dropped, and that affects all producers.
“It all comes down to supply and demand. March and April are normally high milk production times of the year, so COVID-19 occurring at this time has exacerbated the demand/supply discord,” said Ishler.
“Demand always drops after the school year ends, so the COVID-19 pandemic happening when it did caused a major disruption in the supply chain and with the dairy industry coming off five less-than-stellar years of low milk prices, this is an even greater hardship. Milk is a perishable product that needs to be processed quickly and additional disruptions in processing plants due to illness of workers further adds to the issues with the supply chains.”
Dairy farmers rely on milk income, and having to dump milk and get paid a low price will be devastating to many producers’ cash flow, said Ishler.
“This year was projected to be a good year for producers, milk-price wise, to recover from the previous poor years. So COVID-19’s impact on milk price is a real hardship. While the COVID-19 situation may be short-term, the economic impacts will be felt for a much longer time on dairies,” said Ishler.
In Centre County, the exact number of dairy farms is hard to count with many Amish and small farms, said Ishler, but according to the 2017 milk ring test, there are approximately 150 county dairy farms. She is unsure if any local farms have dumped milk, but she knows the low price on milk that farmers are going to get paid is going to be a problem for many of them.
“Agriculture is an important revenue source for Pennsylvania’s economy. Dairy represents the largest share of that agricultural revenue,” said Ishler.
“Our family farms are struggling due to the tremendous impact of lowered demand, supply-chain disruptions and extremely low milk prices.”
At the Penn State Dairy, the staff is busy taking care of the cows while campus is closed.
“We ship our milk to a cooperative just like other farms, so we will be subject to the same pricing restrictions,” said manager Travis Edwards.
“Our main concern is our labor. We have full-time employees and part-time student employees, and may be at the mercy of government working restrictions. Our full-time employees are considered essential, obviously, to take care of the animals and milk them, so they have been working as normal and have maintained a good attitude given the situation. We also have a group of very dedicated students that we are very thankful for that have stayed on to work as normal through the end of the semester. Without their dedication, it would be a very trying situation for us and our full-time employees. The summer may pose a challenge if we are not able to continue to have the students.”
The pandemic has only upped a national and statewide issue, Edwards said.
“2019 was not a good year for dairy with regard to milk price, and PA lost a number of dairy farms. It was the same for the rest of the country as well,” he said.
“Weak prices forced many farms out of business, and this pricing/production proposal during the pandemic will take its toll on even more farms.”
Ishler said the Pennsylvania Department of Agriculture is very supportive and is working with all aspects of government and the USDA to make a case for the hardship the dairy industry is experiencing.
The Center for Dairy Excellence and Penn State Extension have resources and personnel on hand to help dairy producers get through this, including crisis management planning that is available to dairy farms remotely. Webinars and conference calls are helping to provide up-to-date information about strategies to cope with these unprecedented changes.
There is also something that consumers can do, said Ishler.
“Increasing demand for milk and dairy products will help to shift these trends in the right direction, so consume more dairy products and drink milk,” she said.