Covid-19: Impact on the global dairy sector

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Covid-19: Disruptions lead to major milk dumping in US

Amidst Covid-19, there has been strong demand for dairy products at supermarkets, however, the milk supply chain has seen major disruptions that are preventing dairy farmers from getting their products to market.

It has also become apparent that dairy prices have reached lows leading to milk dumping in the US. The mass closures of restaurants and schools has created a major shift from wholesale food-service markets to retail grocery stores.

Sales to major dairy export markets have dried up as the food-service sector shut downs are taking place on a global scale. Photo: Ronald Hissink
Sales to major dairy export markets have dried up as the food-service sector shut downs are taking place on a global scale. Photo: Ronald Hissink

This has in turn created logistical dilemmas for plants processing milk, butter and cheese. In addition to this, sales to major dairy export markets have dried up as the food-service sector shut downs are taking place on a global scale. Therefore, despite stockpiling which is showing signs of decline according to reports, dairy operations in the US are dealing with oversupply and hence milk dumping.

Financial help

Late last week, also dairy operations in Wisconsin, known as the leading dairy state in the US, have begun dumping milk due to excess and no buyers. Reports have stated that seven farm groups from Wisconsin have sent a letter to the US Department of Agriculture, specifically, US Agriculture Secretary Sonny Perdue, asking the department to make use of money under the federal coronavirus stimulus bill to buy large amounts of dry milk, butter and cheese that would under normal circumstances be sold to restaurants and the food-service industry.

The letter to the Ag Secretary stated: “With 80 percent of Americans under order to shelter in their homes, hundreds of thousands of restaurants, schools, and other food service outlets have closed or significantly reduced offerings, which means cheese and butter manufacturers have lost their largest market. While retail sales have increased in past weeks, they are now leveling, and orders are slowing. Dairy manufacturers and processors also have seen their export markets decimated. Dairy processors and farmers are working in cooperation and with open lines of communication, but these circumstances, far beyond their control, are beginning to result in fresh farm milk finding no available market for processing.”

About one-third of the Wisconsin’s dairy products, which is mainly cheese, are sold in the food-service trade.

Photo: Chris McCullough
Photo: Chris McCullough

Struggling

It has also been reported that trucking companies that deliver dairy products are struggling to get enough drivers.

This situation is leaving US farmers with many questions, including what will happen with the milk they produce as the battle against Covid-19 is predicted to extend well into the summer months and how will farmers get paid or financially aided.

During the Spring, dumping normally takes place known as ‘Spring flush’ as many calves are born and milk production increases, so as some dumping normally occurs this time of year, the current situation with Covid-19 causing oversupply has created a major knock-on effect.

  • In a recent podcast, Secretary Perdue talks about the work USDA is doing during the Coronavirus pandemic. From feeding kids all across the country, to ensuring America’s food supply chain remains safe and strong, and making certain our farmers have enough ag workers for harvest. Listen to the podcast now.