In your May 10, 2020 issue . . .
DAIRY DEMAND IS BEING RECONSTRUCTED. Typically, dairy product sales are split 50-50 between food service and retail. In the COVID-19 climate, the retail sector has accounted for more than 80% of dairy sales, said John Talbot, CEO of the California Milk Advisory Board.
GROCERY SALES OF DAIRY PRODUCTS SKYROCKETED upwards of 60% in Wisconsin during the first few weeks of the pandemic as consumers stocked up. Sales have since slowed to a 25% to 30% increase . . . which is still exceptional. “But this isn’t enough to overcome food service losses,” said Chad Vincent, the CEO of Dairy Farmers of Wisconsin.
THERE IS SOME EVIDENCE OF IMPROVING food service sales in the U.S. However, those sales were still running roughly 50% below the same time last year, reported INTL FCStone’s Nate Donnay.
WITH MORE PRODUCTS NEEDING A HOME, both Vincent and Talbot explained how their organizations are talking with processors and food banks every day to act as matchmakers between the two. Creating partnerships is not as easy as it may seem. “It’s a complex situation,” said Vincent on the April 22 edition of Hoard’s Dairyman DairyLivestream.
IN AN UNPRECEDENTED FRIDAY NIGHT MEDIA CALL, USDA Secretary Sonny Perdue detailed a plan to deliver $16 billion in direct payments to farmers. Dairy would get $2.9 billion, or 18%, of the aid. An additional $3 billion would be available for food banks with $300 million equally spent each month in these categories: milk, meat, and produce.
SIGN-UPS COULD TAKE PLACE IN MAY with payments being issued in June. A great many details still need to be worked out. Turn to page 290.
THE PLAN FALLS FAR SHORT of making dairy farmers whole. “Loss calculations must better reflect dairy’s full scale of losses going forward,” said National Milk Producers Federation CEO Jim Mulhern. “USDA’s own calculations in its April World Agricultural Supply and Demand Estimates (WADSE) report peg losses at roughly $8.5 billion.”
FUTURE PRICES FELL EVEN MORE than the WASDE projections from USDA. In early January, May to December Class III futures averaged $17.45 and dropped to $13.90 by April 23. Class IV futures slid even further, falling from an $18.10 average to $11.55 per cwt.
MARCH MILK CLIMBED an unexpected 2.2%. Colorado, Kansas, and Texas each rose over 7.5%. Among the largest dairy states: California, up 1.3%; Wisconsin, down 0.1%; Idaho, climbed 5.2%; New York, rose 2.2%.
EVERYTHING HAS CHANGED SINCE MARCH, as many cooperatives and private processors are telling dairy farmers to cut milk production back to “base levels.” While the amount of milk each farm can ship varies, most milk buyers are asking for a 5% to 10% cutback.
DUMPED MILK AND DISTRESSED MILK SALES have been making headlines, too. Distressed milk sales occur when a cooperative sells the milk at any price just to off-load excess milk collections from members.
USDA CONFIRMED THAT THE 5-CENT CHECKOFF will not be collected on milk that is dumped due to the COVID-19 pandemic. The 10 cents for state and regional programs is subject to state law. California has gone on the record indicating it will not collect the 10 cents.
THE MEAT PACKING SECTOR HAS BEEN HIT HARD during the COVID-19 pandemic as numerous plants have been shut down due to employees contracting the virus. For more insight, turn to page 290.
THE JUSTICE DEPARTMENT’S ANTITRUST OFFICIALS are nearing a settlement to clear a pathway for Dairy Farmers of America to buy dozens of plants from bankrupt milk processor Dean Foods.
