Dairy promotions needed now more than ever group says
At a time when farmers across the state and nation are faced with lower milk prices, and just when hopes for higher prices were on the rise, COVID-19 delivered a gut punch to the dairy industry. Adding to that punch, farmers have been asked to dump milk as a result of upheaval the pandemic has caused in food service across the country.
By law, Wisconsin dairy farmers are required to pay state and national milk marketing programs 15 cents for every hundred pounds of milk they sell, even if they are dumping milk down the drain. Ten cents goes to state and regional programs such as Dairy Farmers of Wisconsin. A nickel goes to national programs such as Dairy Management Inc. (DMI), based in Rosemont, Illinois.
So if farmers receive some reimbursement for dumped milk, from their cooperative for example, they have to pay the fees on it that help fund dairy product promotions.
“It’s just nuts” to pay for marketing something flushed down the drain, Mike Yager, a dairy farmer from Mineral Point, told the Milwaukee Journal Sentinel. “Farmers are the ones dealing with the losses, but the promotion boards still get their money.”
Producers commenting on social media sided with Yager, saying check offs need to go. Yager has called for a suspension of the fees on dumped milk, but he said DMI told him not to expect any changes.
During a conference call with reporters on April 10, DMI CEO Tom Gallagher said national groups like DMI are needed now more than ever. Connections made between feeding banks and farmers dumping milk wouldn't be happening without the efforts of groups like DMI.
As the pandemic caused the closing of schools, school districts have tried to keep feeding programs open but may have to use different sites other than schools, which has created challenges of getting the food to the sites. Restaurants lost 20 - 40% of their business as doors closed and businesses shifted, Gallagher explained. As a result, DMI staff turned their efforts to getting products into the hands of people immediately.
"That's a dire need," said Gallagher. "Overnight, practically, food service was disconnected. Schools are struggling to maintain the supply chain. Our challenge, that we've tried to deal with, is where can we connect those disconnected supply chains to new supply chains."
While DMI's aim is to make connections for dairy products, especially in the midst of COVID-19, progress has been "slower than anybody would like."
"There's not one answer, in terms of what the check off can do. We've got to do a ton of different things and try a ton of different things, and hopefully that will add up," Gallagher said.
Gallagher gave the example of working with pizza chains, trying to get them to add two ounces of cheese to as many pizzas "as they're willing and able to put it on." DMI is "in good shape" with one of the three big pizza chains and is working on other two.
"Without us, there's not going to be the push to get more cheese on the pizza," said Gallagher. "If 25% of our cheese moves, if we can get another percent or two, that's a big number."
While farmers have been viewed as heroes by consumers, now more than ever, farmers and people in the supply chain are being viewed as heroes. DMI is trying to focus on connecting some of those heroes with consumers.
"This isn't the time to really push the dairy products in a way that it looks like you're trying to take advantage of a situation," Gallagher explained. "We really believe it's a time to take that disconnected consumer, who all of a sudden is very interested in the value chain, back to the farmer and connect that farmer. And then, as this crisis passes the residual desire of the consumer to be connected to the farmer, we think will put us in solid shape."
With the focus of keeping milk moving into the market, DMI President Barb O’Brien said they've realigned staff across four emergency action teams — schools, hunger, food service partners (domestic and international) and retail.
"Every day is new in terms of new challenges and new successes in terms of moving product," O'Brien said.
School meals represent 7% of the fluid milk supply, O'Brien explained. DMI is working with GENYOUth, the National Football League, local promotion groups across the country, the U.S. Department of Agriculture (USDA) and food companies "to ensure that this growing demand on school meals is operational."
GENYOUth launched a COVID-19 emergency school nutrition fundraising campaign called "For Schools' Sake – Help Us Feed Our Nation's Kids!" which has raised more than $3 million in corporate and individual donations from outside the dairy industry. The campaign provides grants of up to $3,000 for equipment, packaging and other supplies, "all of which will enable milk in those sites," O'Brien said. More than 7,700 applications have been submitted from school districts so far.
Working with food service partners, DMI has been able to "convene our partners to leverage their supply chain to realign their assets to support both school feeding and hunger," said O'Brien. Chains such as Dominoes are helping to provide meals at school district feeding sites and DMI is working with Pizza Hut and Taco Bell to launch similar systems.
"We're looking at trying to align the greatest need with the greatest opportunities through these chains," O'Brien added.
DMI is also working with Feeding America "marrying what we know is excess supply with mounting demand for these hunger programs," said O'Brien. "Our role is really one of convening. It's about matchmaking as we work with leaders and cooperatives to find processing assets — and those assets are coming from traditional processors, as well as from many of our vertically integrated groceries."
On the retail end, DMI is working with retailers on issues relating to retail warehousing and workforce challenges that grocers are facing in getting products out of the warehouse and into stores.
The virus is impacting the export market the same way it has in the U. S. with schools being closed around the world. Additionally, a destroyed tourism industry has rocked export markets, according to U.S. Dairy Export Council (USDEC) CEO and President Tom Vilsack. The DEC, "because of the investments farmers have made," are working with governments that are ahead of the curve with COVID-19 and is looking for "creative ways to re-imagine and redefine what we do," so it's in a position to "make the most of a very difficult situation today" and "build an effort that will be even stronger in the future."
With a significant portion of the DEC budget for the Center for Dairy Excellence coming from check off resources, if the check off program was "turned off" for a couple of months, Vilsack said "we would have a very significant decline in exports now and in the future."
"If we were essentially to leave the playing field for a couple of months, it would be very difficult for us to regain the momentum that we had, with higher volumes and higher value," Vilsack explained. "We would lose that and it would be a long period of time before we'd regain."
Gallagher said he understands the "cry and concern" about check off dollars during this crisis, but, "I also understand the value we're bringing right now may be even more important to those farmers than it is in normal times."
Rick Barrett of the Milwaukee Journal Sentinel contributed to this story.