One thing we learned especially in the early days of the COVID-19 pandemic and continue to learn now is this: expect the unexpected. That’s been true for consumers trying to buy product at the store, but also for the manufacturers and processors making those products, including dairy processing plants.

Dairy demand has taken unexpected twists and turns as places like restaurants and schools close and then find alternative ways to deliver product. Milk supply has rose and fallen in unexpected patterns as some co-ops and milk buyers implement production limits or take them away. And even packaging and transportation materials — plastic resins, corrugated cardboard, steel, and lumber, for example — have been increasingly hard to come by since more companies need a way to deliver their goods now.

The uncertainty in all those market areas has led to dairy processors receiving orders in a much different way than they used to. Now, orders might be sent week by week, instead of months ahead of time as in the pre-pandemic economy. John Umhoefer, who leads the Wisconsin Cheese Makers Association, shared what many of his members have experienced with their distributors on the April 21 Hoard’s Dairyman DairyLivestream.

“They went from ‘Let’s have a yearlong or six-month contract together,’ to monthly, or sometimes biweekly, or in some cases, ‘We’ll tell you what we need next week,’” Umhoefer said. “That is a completely different paradigm.”

That’s especially true for plants making large volumes of cheese, butter, or other products. If you're moving millions of pounds, you need to know that to secure the necessary milk. With supply and demand so much more tightly related timewise, they rely on each other more to remain stable — or unstable.

“Any disruption in the marketplace is going to be felt in a bigger way. It’s magnified,” Umhoefer continued. “Just the slightest hiccup at a good-sized cheese plant these days can cause a ripple across the entire milkshed.”

Multiple suppliers
On the front lines of the balance between having enough milk to fill orders but not more than can be sold are people like Bryan Weller, the director of procurement and sourcing for Agri-Mark, which produces Cabot brand products, among others. He explained that the pandemic volatility has forced them to look at having more than one supplier as a way to reduce the liability of not being able to fill orders.

“Price is still very much important, but security has definitely usurped that in terms of what we’re looking for,” Weller said. It’s a tight rope to walk to be the best partner to your supplier, he said, but having a backup plan helps keep moving product out the door.

An ongoing series of events
The next broadcast of DairyLivestream will be on Wednesday, May 5 at 11 a.m. CDT. Each episode is designed for panelists to answer over 30 minutes of audience questions. If you haven’t joined a DairyLivestream broadcast yet, register here. Registering once registers you for all future events.

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(c) Hoard's Dairyman Intel 2021
April 22, 2021
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