Milk shelves are empty, yet dairy farmers are dumping milk. Here's why.
The coronavirus pandemic has triggered a major disconnect in the dairy industry. On one hand, milk shelves at the grocery store have been sometimes bare. On the other hand, North Country dairy farmers are having to dump their milk for lack of a market. It's a worst-case scenario for the region’s dairy farms as the industry’s been hurting for years.
A Jefferson County farmer dumps 9,000 gallons of milk down the drain
Last week, Lyle Wood of Clayton got the notice from his milk coop, Dairy Farmers of America to dump three loads of milk a week, "which meant Monday afternoon we’re dumping, Wednesday afternoon we’re dumping, and Friday afternoon we’re dumping," Wood said by phone.
About 9,000 gallons of perfectly good milk from his 1,200 cows down the drain. "To watch it go down the drain is just very disheartening," Wood said. "It doesn’t make you feel real good."
Across the North Country and across the nation, dairy farmers have had to dump milk for a couple of weeks now because their coops say there's too much milk on the market.
And yet get this — grocery stores have been struggling to keep fresh dairy products stocked.
"I’m seeing stores shelves empty day after day after day of dairy products," said Jay Matteson, agricultural coordinator for Jefferson County. "And we’ve got dairy farms being told to dump their milk."
How does too much milk and not enough make sense?
So what is going on? Matteson explained that the problem started with the initial run on food at the beginning of the coronavirus pandemic. Back when everyone bought out toilet paper, they also hoarded dairy. "People went to the stores. They bought milk. They bought butter. They bought everything," said Matteson.
But milk, of course, is very perishable. The whole supply chain is built on delivering just enough milk to sell right away. "All of a sudden, this system that operated basically on-demand, the milk supplied just before it was needed," Matteson said, was disrupted, "and it just screwed the whole system up."
Most dairy farms are far from where the biggest demand is, which is in big cities. And some milk plants closed or throttled down production to prevent COVID-19 from getting inside. So that all slowed the system from responding quickly.
Dairy's biggest market disappears overnight
But it was when the other shoe dropped that things got really bad, Matteson said. Governors across the country ordered schools and restaurants to close, shutting down the dairy industry's biggest market.
"The five-pound tubs of sour cream and cream cheese," said Matteson. "Every time a burger joint put two slices of cheese on a burger, over the country, over the whole United States, that’s a lot of demand for cheese. All of a sudden, we saw that go almost completely away."
So to sum it up: there's more demand in the dairy aisle at the grocery store, but a lot less demand from the prepared foods industry.
Andrew Novakovic, professor of agricultural economics at Cornell University, said net equation is bad for farmers. "The net of the parts of the dairy industry that are selling more with the parts of the dairy industry that are selling less is clearly pushing down on total sales opportunities," Novakovic said.
Dairy's high hopes for 2020 are dashed
And that’s why the Dairy Farmers of America milk co-op is telling Lyle Wood in Clayton to dump three loads of milk a week. And that especially hurts, Wood said, because farmers thought 2020 would be a comeback year for dairy. "We’ve had five years of bad milk prices," said Wood. He said the hope was, "boy, this is finally the year we’re gonna knock it out of the park."
But with the coronavirus pandemic as a backdrop, the opposite is more likely, more economic devastation for dairy country. Wood said milk prices could drop as low as ten dollars per hundredweight, far below the cost of production.
Politicians on both sides of the aisle say they’re trying to help. Democratic Sen. Kirsten Gillibrand is calling for federal farm loan forgiveness. Republican Rep. Elise Stefanik wants to see direct payments to dairy farmers, among other efforts.
Wood said for now, he has no alternative but to shrug it off, keep working, and keep dumping milk. "Just keep looking forward, trying to put one foot in front of the other and working with your bank and working with different people," Wood said. "Just trying to keep moving forward."