Dairymen battle market fallout from coronavirus
These days, as he dumps about a third of his herd’s milk onto his field, Bob Miller thinks about rejoining a cooperative.
The owner of Nice Farms Creamery in Federalsburg, Md., puts all milk from his 50-cow herd into a series of dairy products — milk, ice cream, yogurt and butter — which he sells at stores, coffee shops, farmers markets and through home delivery.
It’s a pasture dairy at the beginning of a spring flush, and its production peak is occurring now. But due to the coronavirus, the creamery has lost nearly two-thirds of its business over the last two months.
Dumping milk disgusts Miller, and he thinks about selling his farm.
“To me, it’s a personal failure, and I don’t like it,” he said.
Miller is one of hundreds of farmers across the Delmarva region who had their operations turned upside-down by the COVID-19 pandemic. Schools, restaurants and many institutions have closed, abruptly wiping out a large percentage of dairy sales.
The virus extinguished any optimism at the beginning of the year that milk prices would rebound, providing farmers the possibility to at least meet the cost of production this year. In its April report on the dairy market, the National Milk Producers Federation said the dairy industry is “deep in crisis mode.”
Nationally, milk production in March increased more than 2 percent over last year, and industry analysts believe about 10 percent of total production would need to disappear for prices to improve.
“The word unprecedented has been used a lot, and it’s certainly been an unprecedented time for the industry,” said Lindsay Reames, director of sustainability and external relations at the Maryland & Virginia Milk Producers Cooperative Association in Reston, Va.
In an effort to cut oversupply, Land O’Lakes recently announced it will charge its farmers $10 for every hundredweight they produce over their set allotment. Maryland & Virginia Milk Producers Cooperative Association, which represents about 1,000 farms, hasn’t had to order milk dumping thanks to a strategic shift in its business over the last several years toward retail outlets, Reames said.
Other farmers, particularly those with retail operations, have had to rapidly adjust to the changing consumer market. Miller decided to launch a delivery service for his creamery after realizing many of his customers were reluctant to find him at regional farmers markets. He set up emergency routes and has been making deliveries without hiring additional personnel. With the decline in business, he can’t afford it.
“I’m working 18 hours a day,” he said. “All it’s doing is just wearing everyone out. It’s kind of bleak, and until things kind of open up, I don’t think it’s going to get any better.”
Richlands Dairy and Creamery in Dinwiddie, Va., sprung to action after the virus forced the farm to shut down its agritourism attractions, including tours and hayrides.
The creamery, owned by Brittany Jones, farm manager, and her husband, ordered a large whiteboard and posted a menu to it. They stuck it in a field next to the creamery, where they improvised a drive-thru system. In addition to ice cream, they’re serving lunch and dinner.
“That was fly-by-the-seat-of-your-pants,” Jones said.
When she noticed the drive-thru line was getting long, she let the farm’s cows graze in a pasture near the cars, and she hired two musicians to provide live music. The farm also had some good fortune as well. Last month, as the pandemic was taking hold, several regional Food Lion grocery stores were struggling to keep up with customer demand.
Richlands Dairy and Creamery now supplies 10 of them. Before the pandemic, the creamery was taking about 11 percent of the dairy’s milk. (The rest went to their cooperative.) Now, they’re using a quarter of their milk.
“It’s horrible to say that we got lucky right then, but that’s what happened,” Jones said.
Bob Miller — unrelated to the aforementioned Bob Miller — owner of Chesapeake Gold Farms in North East, Md., has accelerated plans to expand his line of value-added products. The farm already produces cheeses and dairy beef, but he said he’s planning to add butter or yogurt.
Almost 95 percent of the milk from his 220 cows goes to Land O’Lakes, but he said the milk futures markets, which have dropped heavily over the last four months, trouble him. If the gloom they project is true, it could spell serious trouble for Miller — and many others farmers.
“Without any government assistance or indemnity payments, it would probably put (me) out of business,” he said. “We’ve had five bad years below the cost of production.”
Only four Maryland dairies have closed in the first four months of 2020 — fewer than previous years — and none in April as of the 22nd, according to the state health department.
Some help from the USDA is on its way. Agriculture Secretary Sonny Perdue announced April 17 a $19 billion assistance package for the agricultural industry, including help for producers and purchases of at least $100 million per month in dairy products for public distribution. Dairy farmers can also apply for emergency loans from the Small Business Administration, though the National Milk Producers Federation said Thursday that many farmers are having trouble accessing those funds.
Demand for dairy products from retail customers, however, is still robust, said David Staz, president and general manager of Dairy Made Dairy, a Frederick, Md., processor owned by Dairy Farmers of America. The processor, which has its own retail brand, is producing about 85 percent of its normal volume, he said.
A major factor for dairy product sell-outs in grocery stores has been the shifting behavior of consumers, many of whom are stuck at home in quarantine and are reluctant to shop at peak times. Typically, weekends are the most popular shopping period of the week. Now, retailers said, it’s mid-week.
“We will get volume spikes where there will be real big orders, but then two days later, we’ll have a really small day,” Staz said.
Back in Federalsburg, Bob Miller from Nice Farms Creamery continues to contend with consequences of the virus. Last week, he urgently needed a valve for his water wagon, but Amazon halted next-day shipping. He finds it difficult to directly reach a salesman at local equipment dealerships, and it’s gotten harder to buy milk jugs. He slashed pay for one of the farm’s employees living in a home rent-free on the property.
“We’ve gone back to the Middle Ages,” he said. “It’s like I’ve got a serf.”
And the farm is for sale if anyone’s interested. For Miller and many in the dairy industry the coronavirus could be one challenge too many.
“It’s just another thing,” he said. “It’s just another torpedo in the S.S. Dairy ship.”
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