With hundreds of thousands of restaurants, bars, schools and universities suddenly closed farmers have seen an extreme reduction in sales. Across the board, dairy product producers are feeling the effects of COVID-19 on the marketplace.
“The cheese industry has lost a great share of its largest market,” John Umhoefer, executive director of the Cheese Makers Association said. “Nearly half of all cheese sold in the United States moves through foodservice channels while one third is sold at retail grocery stores.”
Dairy customers and dairy industry contractors have been canceling their orders while dairy exports fall worldwide and Americans' buying habits change.
Reports of milk dumping have already popped up in Wisconsin. The Wisconsin Farmers Union reports some dairy processors have reached their supply capacity and have asked farmers to dump excess milk.
Ellsworth Cooperative Creamery sent out letters last week to partnered dairy farms informing them they may need to begin dumping milk if supply is not reduced. The letter asked farmers voluntarily to reduce the volume of milk being shipped by 7% through methods such as culling cows, drying cows early and/or reducing feed rations.
"I'll use numbers that we have at Ellsworth, our foodservice industry or our food retail side dropped 65%, we have been able to recoup 25% up on curds. However we are still down 60% on total curds sold. The food industry was that big and it stopped," Marty Hallock said to WAXX-FM’s Bob Bosold. Hallock is a member of Ellsworth Cooperative Creamery Board and a dairy farmer from Mondovi. Wisconsin.
In southeastern Minnesota, creameries are also suggesting that farmers reduce their production of milk, either by selling cows or dumping milk.
The Ellsworth Cooperative Creamery letter shared how dairy farmers could quit the business altogether. Under a new cooperative program, dairy farmers would be paid all of their equity from 2010 through 2019 if they sell all of their cows by April 15. Among the program criteria, they must not sell their cows to an existing member of the cooperative.
“We are hoping that by doing that, it will help the producers that stay in but it will also give the money for those who are getting out to do something with,” Hallock said.
In the meantime, the cooperative will continue to process milk into cheese for long-term storage.
Transporting the product
There is not a shortage of food in Minnesota or Wisconsin. The problem is in transporting the food from farms to places of purchase.
Margaret Hart with the Minnesota Department of Agriculture spoke with reporters about the department’s work to ensure food is delivered as needed:
“We know there was concern about an already existing shortage of truck drivers to transport food, agricultural and livestock products and that is why we encouraged Governor Walz to issue an executive order that waived the hours and weight restrictions on trucking so that these products could get where they need to go. Most aspects of agriculture are considered an essential business under the governor’s Stay at Home order so farm and ag businesses can continue to operate.”
Like Wisconsin farmers, Minnesota dairy farmers are feeling the added pressures of COVID-19 on the economy.
Fran Miron, a fourth-generation farmer and member of the Washington County Board, runs a dairy farm with his wife and two sons. Miron was hopeful that 2020 would bring higher milk prices.
“We’ve really gone through a half decade of low prices with respect to dairy,” he said. “We were very optimistic. All of the projections were showing an increased milk price for us here in 2020.”
The projected increase in milk prices was seen in January’s check for milk, but that amount has been falling monthly.
“It's real money and a lot of it for dairy farmers,” Kay Zwald said. Zwald is a dairy farmer in Hammond with around 250 dairy cows. She works alongside her husband, their two adult kids and their spouses. She says the price of milk dropped quickly and pointed out that it could drop even more. “Prices just seem to keep dropping for all of the commodities,” she added.
A successful farm requires a variety of equipment, food sources for livestock and vehicles for transporting goods. This means that a local farming operation can be impacted by numerous sectors of the economy. Miron explained a few of the ways that his farm has been hit by the pandemic outside of the fall in dairy prices.
While the drop in gas prices means that planting and harvesting crops will be more economical because fuel will be less expensive -- Miron and his sons plant about 800 acres annually to feed their cows -- the dip in gas prices has resulted in lower corn prices due to a diminished demand for ethanol.
“Ethanol production becomes non-economical when gas prices are as low as what they are,” Miro exlained.
The drop in ethanol production impacts crop growers and numerous dairy and livestock farmers.
“We typically buy byproducts from ethanol plants to supplement our rations for our dairy cows. Those commodities are no longer going to be available because ethanol demand is down, he said.
The health of farmers
While farmers have numerous unique challenges and fears during the pandemic they also face the possibility of contracting COVID-19 and needing to quarantine themselves.
The University of Minnesota’s Extension program works with numerous organizations and communities throughout Minnesota.
A piece on Extension’s website written by Natalie Hoidal and Jake Overgaard states:
“Some farms have expressed concerns that if they have to close for a while because they’re sick, people might not trust them in the future, or might become wary of local foods. Ultimately if you need to close temporarily while you and your employees recover, it will show your customers that health and safety are priorities for you (your health and safety, but also theirs!). As long as you communicate what’s happening, how you’re responding and how you’re making sure that safety is your number one priority, people will appreciate your honesty and concern for safety.”
Miron is worried that if he or his sons contract COVID-19 they may not be able to accomplish chores to keep the farm running.
“If any one of us get sick with the virus and that type of thing for a period of time, especially if it’s during those early weeks in May when we’re trying to get a crop in the ground, that could have long term effects on our feed availability here if we don’t get that crop in the ground,” Miron explained.
So far the workers at Zwald’s farm remain in good health, she hopes it stays that way. She is trying to find a balance between completing the necessary tasks to keep her farm operating and maintaining a safe environment for employees.
“We are all very aware of what is going on. We are trying not to intermingle with others,” Zwald said.
Looking for finances elsewhere
Farmers can continue to work on their farms under Walz’s Stay At Home order and Gov. Tony Ever's Safe At Home order, but many have a second job to help support themselves and the farm financially. With the economic fallout and shuttering of businesses farmers have and may continue to lose their secondary jobs.
“Many farmers who were already experiencing low commodity prices may also be facing the loss of their additional off-farm jobs so there is concern about that as well as the loss of foreign and domestic markets,” stated Hart.
Various organizations and government municipalities are working to aid farmers during this challenging time. Hoidal and Overgaard say in their article for U of M Extension:
“If you are predicting reduced sales for your farm, there are a few lower-risk planting options to consider. Shifting towards longer season crops that can be harvested later will give you some extra time to figure out back-up markets. Planting things that can be stored easily without intensive inputs (dry beans, popcorn, herbs to dry for teas, winter squash) may provide you with more flexibility. Ryan Pesch, a farmer and Extension educator near Pelican Rapids recommends sticking to the basics - people may be more interested in staple crops than novel varieties this year.”
A call to action
“We look to the federal government to immediately begin to purchase dairy products to offer to food pantries and school feeding programs so dairy farms can continue to deliver fresh milk and we can help America’s food insecure families during challenging times," Umhoefer of the Cheese Makers Association said.
Umhoefer is not the only one who wants the USDA to act swiftly. On April 1, the Wisconsin Department of Agriculture, Trade and Consumer Protection urged the USDA to purchase surplus commodities and re-open enrollment in the Dairy Margin Coverage program.
“By re-opening the DMC sign-up period, dairy farmers will be able to make an informed decision based on the impacts of the national emergency and their farm’s current situation. Farmers may choose to buy additional coverage that will enable them to weather this pandemic and continue to contribute to the state’s dairy industry for another generation,” the Wisconsin Department of Agriculture letter read.
Another letter sent to the USDA by the Wisconsin Farmers Union and several other dairy-related associations urged the USDA to use the purchasing power it received through the Coronavirus Aid, Relief and Economic Security Act to bring relief to the dairy industry. The group asked the USDA to focus on purchases of nonfat dry milk, butter, cheddar styles, mozzarella and other Italian-style cheese in bulk and in formats for use by restaurants and other foodservice vendors.
“We are also asking USDA to look at the different means available to the department to make farmers whole for the milk they have produced, but needed to dispose, or for which they received drastically reduced payments,” the letter read.
It goes on to note that the CARES act directs billions of dollars toward a disaster relief fund for agriculture, SNAP programs and support for food banks and the food insecure.
“We need USDA to bring these forms of aid to bear immediately,” the letter emphasizes.
Currently the USDA is working with the private sector to provide school lunches for children in rural areas of the United States. They have also waived restrictions and expanded flexibilities in programs as a reaction to the COVID-19 outbreak.
Along with other farmers across the nation, Zwald will wait to see what happens next.
“As long as we are healthy we can continue to do all the many jobs that need to happen on the farm,” Zwald said. “I'm really hopeful that this will be done soon and be back to business as usual.”