Because of COVID-19, every facet of the dairy industry was dealt a heavy blow. Across the dairy case, every product sustained significant demand drops.
In Wednesday’s Hoard’s Dairyman DairyLivestream, the question was posed, “What dairy product has taken the biggest hit from COVID-19?”
“I can tell you that the area that I’m deeply concerned about is on the powder side. Not only do we see a significant reduction possibility in Mexico, but also in Japan,” said former Secretary of Agriculture Tom Vilsack. “A lot of our volume is funneled through that medium,” continued Vilsack, who now serves as the president and CEO of the U.S. Dairy Export Council.
DairyLivestream presenter Mark Stephenson looked at the question through a different lens.
“I think it depends a little bit on the product,” the University of Wisconsin-Madison economist surmised. “If your marketing channel was largely focused at restaurant and food service sales, then you may be badly damaged during this time period by not having an opportunity to get into some of those other channels.”
“Some of our smaller boutique specialty cheese operations are where they’ve really been hammered trying to sell some of that product in marketing channels that hadn’t been developed ahead of time,” he said.
Food service hit hard
Cornell’s Andrew Novakovic echoed Stephenson’s concerns specifically mentioning products that have heavy use in restaurants such as processed cheeses.
“As Mark says, where it’s been really tough sledding is if your primary customer is food service or institutional use. What’s big in that? Processed cheese is gigantic in that sector,” he accentuated. “In the case of processed cheese, the early indications we’ve seen so far are that production of the processed cheese actually has held up okay, but I think there’s a distinct possibility that particularly cooperatives are making barrel or block cheese, but they don’t have a commercial customer.”
“So, they’re putting it into storage and kicking the can down the road hoping that markets will open up and they’ll have a commercial sale. Looking at a production report isn’t going to necessarily tell you what the commercial sale is and that’s why we have to pay attention to stocks,” he concluded.
In addition to reflecting on the impacts of COVID-19 on products and exports, the panel discussed markets of opportunity and U.S. efforts in relation to geographic indicators during “Where are dairy exports headed?” Fourth panelist Butch Speth shared export insights from the perspective of USDA’s Dairy Market News on when and where we might see export improvement.
An ongoing series of events
“The dairy farm finance pivot” will be the topic for the May 20 DairyLivestream. Panelists will include Sam Miller, managing director of agricultural banking at BMO Harris Bank. In this role, Miller works with farmers and agribusinesses on credit structure and financial analysis. Roger Murray will also join the discussion; he serves as the executive vice president of Farm Credit East.
As always, the panel of experts will discuss over 30 minutes of audience questions. If you haven’t joined a DairyLivestream broadcast yet, register here. Registering once registers you for all future broadcasts.