A time for thinking, innovation and change
Staying home and mostly inside is a boring existence (for me) to say the least as compared to my pre-coronavirus life of visiting farms, attending meetings, shows and conferences and talking with people. On the other hand, going places and mingling with crowds is not a good choice according to all the health experts and I’ll go along with their opinions and spend my time on the computer and phone, watching the world go by at a distance.
The agricultural news continues to be heavy with doom and gloom stories: Milk oversupply and dumping, meat processing plants closing as employees are diagnosed with the virus, ethanol production dropping to new lows and most everything in agriculture that we knew all our lives is changing by the day.
I do, however, firmly believe agriculture and farming will survive long-term, perhaps faster than we may think, but when it gets back into normal gear it may well be much different than we might ever expect. Remember: farmers think fast, are innovative and will find a way to do what needs to be done.
Milk dumping continues to be a subject of discussion in the news - and why shouldn’t it be? It seem to be happening all across dairyland but the only two processors I’ve heard requiring production cutbacks are Dairy Farmers of America – the huge dairy marketing cooperative headquartered in Kansas City – and Grande Cheese, a privately owned company headquartered in Fond du Lac.
By now everyone should realize why milk and other dairy product consumption has gone down – school and restaurant closings and the cancellation of all meetings and conferences resulting in less consumption of dairy products all across the food service industry.
This seems to be not understood by many people, some who blame the farmer for dumping perfectly good milk. If the processor can’t market the milk produced by the farmer, what can be done?
A few days ago I asked Grande Cheese officials if they would explain their reasons for asking their farmer patrons to produce less milk. They responded with the best explanation I’d ever expected or have heard. Understandable, well-written and from the heart. Take a look.
From Grande Cheese
(A statement from Grande Cheese Vice President of Milk Marketing & Supply Chain, Greg Siegenthaler:)
“The past six weeks have been very challenging for the nation’s dairy industry. With 80% of Americans under order to shelter at home, and hundreds of thousands of food industry businesses and outlets closed or dramatically reducing operations, the market for milk, cheese and butter has contracted.
Grande Cheese Company is among those impacted. Being a dairy company dedicated 100% to the foodservice market supporting restaurants and pizzerias, we have seen our demand drop significantly. With the sudden and unprecedented situation continuing, we have taken several measures to stabilize our operations. A key decision is to institute a 20%, across the board reduction of the milk we purchase from each of our producers. We are also taking internal measures to adjust operations to temper the significantly lower product demand that we face.
Additionally, we have also redirected our efforts to identifying and engaging with alternative markets and channels for our cheese and dairy products. This work supports our efforts to find a home for as much of our producers’ milk as we can as well as to keep our plants and Associates as fully employed as possible. We are committed to bringing back as much milk production as we can as quickly as we can, but in the current economic situation this will likely be months before demand approaches levels prior to this disruption.
This has been a difficult process, as we care deeply about our producer farms and we acknowledge the impact this reduction has on them, on our Associates and on the health of our business. We have provided, at our expense, direct support to our restaurant operators in the form of complimentary marketing materials for carry out and delivery and launched our first ever direct to consumer campaign encouraging consumers to support local independent pizzerias.
Similarly, we have been in constant contact with our producers and have provided them with support on how to leverage and take advantage of the CARES Act to support their family businesses. Finally, we have joined our trade associations in vigorously advocating for the USDA to provide direct assistance to farmers, to expedite a substantial purchase of dairy commodities by the USDA. These actions would help bring stability to the dairy industry and our individual partner producers. Like everyone, we look forward to the day when we can resume business operations as usual.”
Not all companies will provide such a clear and complete statement about their business decisions...thanks Grande.
I asked a dairy farmer friend and producer for Grande his thoughts about the production cut. Of course, he didn’t like to take a big cut but said he “respected Grande’s decision. They’ve treated us well for a long time and are a great company.”
How does a dairy farmer cut milk production? No one way but several maybes: Move from 3 to 2 times a day milking if that applies; change cow nutrition; sell cows: dump milk. The fastest way, of course, is to dump milk, most are long-term ideas. Most dairy producers will admit uncertainty rules at the moment.
Bill Stade, longtime auctioneer who has conducted a Wednesday dairy cattle sale at his Richland Center auction facility for many years, tells me that last Wednesday was about normal with a high cow price of $1200 with most in the $800-$1100 range. Included was a 30 cow herd retirement dispersal.
Stade is aware and concerned about the recent closures of several meat processing plants - one, the big pork processing Smithfield plant at Sioux Falls, South Dakota, which represents up to 5% of U.S. pork production, supplying 130 million servings of food a week and employing 3,700 people. Stade also mentioned that the big dairy cow processing plants have noted a change in consumer meat purchased from the high priced cuts from fattened beef cows to lower graded cuts and hamburger from dairy animals.
Not only dairy
All farm products (not only dairy) are being impacted by the coronavirus pandemic. Ethanol plants are closing as people are driving less thus shrinking the important sales market for corn growers; exports are not moving and on and on.
For now farmers are still farming and producing food in big amounts. If stores are limiting milk purchases – as a few friends have reported – ask why and tell them there is plenty of milk available at an economical price. Just get it!
Stay in, stay away, stay full (of dairy) and stay well!
John Oncken is owner of Oncken Communications. He can be reached at 608-572-0747, or email him at firstname.lastname@example.org.