Dairy Farmers Are Dumping Milk They Can’t Sell, Despite Grocery Store Demand
It’s an early sign that supply chains will have to adapt to a new normal.
In terms of how we feed ourselves, these are strange, anxious times. With restaurants closing or at least greatly augmenting the logistics of their operations, there’s been a natural strain on grocery stores and their supply chains. That’s why we’ve seen egg prices soar to the point that people think raising their own chickens is a better investment.
With that in mind, stores like Walmart imposing purchase limits on essentials like milk would seem like a necessary precaution, lest dairy farmers run out of milk to sell. But as Reuters points out, a series of restaurant closures and supply chain complications mean dairy farmers in fact have too much milk, leaving them with little choice but to let it go to waste, even at a time when retail demand for milk is up more than 50 percent.
While producers of other less perishable agricultural commodities can afford to wait it out a bit by freezing or storing their products, dairy farmers like Jason Leedle don’t have many options. He’s been told by his contact at producer cooperative Dairy Farmers of America told him to start dumping milk. While dairy cooperatives (who coordinate the process of getting milk from producer farms to end customers) will pay out producers like Leedel for some of their dumped milk, it’s less than what they’d earn from milk that people actually drink.
“It’s just gut-wrenching,” the dairy farmer who’s dumped 4,700 gallons from his herd of 480 cows every day since Tuesday told Reuters. “All I can see is that line going down the drain.”
Warnings from other cooperatives have been even more dire, laying out the situation in blunt terms.
“Now is the time to consider a little extra culling of your herds,” dairy cooperative Foremost Farms USA told its members on March 17, according to Reuters. “We believe the ability to pick up and process your milk could be compromised.”
At the heart of the supply-demand imbalance is a sudden shift in where milk is going. Widespread closures of schools and restaurants mean many dairy processors and distributors have lost access to the wholesale clients they depend on. Additionally, major restrictions on the flow of goods across borders has shriveled the export market almost entirely.
“About half of US consumers’ food budget was spent on restaurants, and we’ve shut that spigot off,” Matt Gould, who edits trade publication Dairy & Food Market Analyst, told Reuters.
Unfortunately, shifting the dairy supply from wholesale to grocery store retail sales isn’t just a simple matter of rerouting trucks. Milk sold to wholesale clients requires different packaging than the quarts and gallons that we’re used to seeing in grocery stores. Accounting for that would require changes at dairy processing plants, which are already cutting hours for workers and having a hard time working keeping up with the milk that’s coming in. Add in a shortage of truck drivers with experience hauling dairy and you have the recipe for a logjam of milk that can’t get to where it needs to go.
To be sure, milk isn’t the only product that will experience these kinds of issues in the weeks and months ahead. Restaurants, schools, and other wholesale clients buy a vast array of products, and it’ll take time and money to reorient production towards the surge in grocery store demand. But given some increasingly dire predictions about how long social distancing policies will need to be in effect, there may simply be no other choice but to adapt to this new, unprecedented way of doing business.