Pandemic disrupts potential dairy recovery
All in all, says Clark County UW-Extension dairy and livestock agent Matt Lippert, 2020 was shaping up to be a decent recovery year for Wisconsin farmers.
Supply and demand were lining up, milk prices paid to farmers had moved back into the $17 per 1,000-pound range, and weather conditions could not conceivably be any worse than they were a year ago.
Then came COVID-19.
In a matter of a few short weeks, Lippert said the outlook for dairy farmers has crashed, with milk futures showing $11 prices likely for the next several months. Worse yet, with milk demand plunging as people have been forced to stay at home, there is too much product in the supply line and some factories are asking their patrons to dump their beloved milk down the drain. It’s a “heartbreaking” set of circumstances, Lippert said, and likely to continue the trend from 2019 that saw almost 800 of the state’s small farms go out of business.
Lippert said he has heard no direct reports of farmers dumping milk in Clark County, but it’s a very possible scenario as the industry reels from suddenly-sinking markets. Supplies of milk are usually at their strongest of the year during what is known as the “spring flush,” Lippert said, and milk dumping is sometimes needed when processing plants get more milk than they can sell. “This is normally the tightest time of the year,” he said. “It (milk dumping) has not been unheard of in some parts of the country.” Now comes the coronavirus, and a virtual shut-down of the restaurant industry. “Most of the fast food outlets have closed. They are a big consumer of cheese,” Lippert said. “That demand has just collapsed.”
The statewide closure of schools is another problem. With children lining up for lunch each day and pounding down pint after pint of fluid milk, it gave bottlers an outlet for the raw milk bought from farmers.
“We see dairy demand pick up” when schools open in fall. Now, there’s been an “abrupt and sudden drop in demand,” Lippert said. When that occurs, obviously, prices plummet.
Making matters worse, farmers were receiving low prices over the last several years due to a variety of market factors. Finally, in recent months, it was hovering above $17 again, which is close to the rate seen by the industry as necessary for farmers to break even with input costs.
“We were kind of recovering with prices,” Lippert said. “It looked to be strong through the year. Supply and demand seemed to be pretty much in line. We really didn’t expect this.”
Processors that can’t take all of their patron’s milk generally ask the strongest ones to dump, said Lippert. Those that do send their milk down the drain or spill it into a manure pit are paid for that production, but the losses are averaged out over all patrons’ milk checks. Everybody sees a price cut.
Adding to the spring dumping scenario problem is the logistics of what to do with thousands of gallons of milk. One option is to land-spread it, but many farmers must abide by nutrient management plans that limit how much they can dump over their acreage. And, it’s muddy out there right now.
“A lot of the fields aren’t in good enough shape to spread,” Lippert said. “They’re just getting started hauling manure today.”
Another option is for a producer to put the milk in a bulk truck, then back the truck up to a manure pit and pour it in. That doesn’t work if the manure pit is full because the ground is still too soft to spread the contents.
Regardless of how dumped milk is handled, Lippert said there is also the emotional toll to consider. A dairy farmer’s life’s work is making milk, and it’s difficult to see it spilled on the soil.
“It’s heartbreaking,” he said. “There’s a lot of hard work on a farm. You’ve done that work all to turn around and dump it.”
Farmers who are asked to dump also have to consider how to proceed with feeding their herds. The temptation may be to reduce certain components of cow rations to reduce costs, but that’s not always the best choice.
“People could be penny wise and pound foolish,” Lippert said. “Some of these things make you more money than if you don’t feed them at all.”
It also doesn’t work to try to slow a cow’s production for a time, and then try to get the animal to return to normal outputs.
“If you slow them down now, you can’t get the cows to come back in production as much,” Lippert said.
A potential solution to the short-term oversupply problem could be to cull more cows. However, it’s hard to convince a farmer who’s not making enough money that he needs to send to slaughter some of his revenue machines.
“It’s very hard for a producer to do that,” Lippert said. “They need more cows to make enough money. To produce less valuable milk, and less of it, that’s a double whammy.”
That “double whammy” created by the coronavirus pandemic could be the death knell for more small farms that have been barely scraping by in recent years. The state lost about 10 percent of its farms in 2019, and Lippert fears that trend will continue.
“It looks like we’re going to lose more farms,” he said.
