Dairy has been one of the retail bright spots during pandemic
for The Fence Post
Even in the midst of the COVID pandemic, there’s finally encouraging news for the dairy industry. Dairy volume growth is showing a turnaround with dairy sales increasing in many of its food categories.
“One thing the pandemic did do… it helped people realize where their food is coming from, when people want to buy milk from the farm and get their food because they were worried that stores wouldn’t have it. In April, milk prices dropped at an unprecedented rate and then in May they rebounded and cheese volume growth was higher than it’s ever been before,” said Orville Miller, who runs Miller Dairy in Hutchinson, Kan., with his wife Mary Jane and their family. “People finally realized that milk doesn’t just show up on grocery shelves and it takes a lot just to get it there.”
A lot indeed. Mary Jane wakes up every day at 1:30 in the morning to begin milking the 170 cows. Orville handles the other farm chores.
“Mary Jane loves that time of morning. She feels it’s her time with God and the cows,” Orville said.
The latest news as of July 26, 2020, shows the following dairy sales growth since this time last year, and also the dramatic increase during the peak COVID period March 9 to July 26:
• Refrigerated milk (RFG) and shelf stable milk is up 3.7% compared to a year ago, but during the peak COVID period (March 9-July 26) sales were up 8.1%.
• Natural (and processed) cheese volume growth is up 16% from last year, but during the COVID peak sales were up 24.6% from a year ago.
• Ice cream and sherbet increased: 10% from last year, but during COVID sales increased 15.2% from a year ago.
• Butter (and butter blends) sales volume jumped 31%, but during COVID sales shot up 45.3% from a year ago.
• Cream saw a big jump of 22%, but during COVID sales increased 32.3%.
• Sour cream had a 17% increase, with sales up 26.1% during COVID compared to 2019.
• Cottage cheese rose 4.4% since last year, then doubled to 8.9% sales volume during the pandemic.
• Half and half increased 8.7%, then during COVID sales were up 13.4%.
• Yogurt had a modest increase of 3.5%, with sales rising 5.4% during COVID compared to a year ago.
“At the retail level, it’s been one of the bright spots for a difficult year. It shows the importance of the product for the consumers. It shows increased dairy consumption at home, and that people are using dairy more for their own meals, and hopefully this will be something that lasts,” said Alan Bjerga, senior vice president of communications for the National Milk Producers Federation based in Arlington, Va.
Dairy Management Inc. said that “2020 will be firmly cemented as an unprecedented roller coaster for the dairy industry.” The outlook for U.S. average milk prices for all of 2020 continues to rise and is approaching 2019’s average of $18.60 per cwt., not including the substantial Coronavirus Food Assistance Program payments for which all dairy operations are eligible this year.
THE DAIRY LIFE
Through this whole pandemic, daily life hasn’t changed much at the Miller’s dairy farm. Miller said they milk cows and ship the milk the same way they always have.
“We do chores all the time. We love what we do,” he said. The Millers also farm 1,200 acres for grain and silage, including corn, alfalfa, grain sorghum and forage sorghum, and cash crops of wheat and soybeans.
“In winter, every acre is planted to cover crops, alfalfa,or wheat,” said Miller, who is on the Midwest Dairy Milk Promotion and Checkoff Board. He was also appointed by the U.S. Agriculture Secretary to be on the National Dairy and Research Board.
“It’s an appointment for USDA, I’m a farmer voice for checkoff dollars. For every 100 pounds of milk sold, there’s 15 cent checkoff. A dime stays local, and a nickel goes to the national program for dairy promotion and it automatically comes out of the price of our milk. It’s an investment by dairy farms to promote milk sales,” he said.
Dairy sales, Bjerga said, “radically turned around in mid-late March,” but this is an even bigger increase.”
The two weeks ending March 22 saw the largest increase in sales. The huge increase in demand for dairy as well as other food products is attributed to customers response to the coronavirus outbreak.
“The outbreak forced most people back into their homes for meals as they pivoted to the situation of working and schooling from home,” said Madlyn Daley, senior vice president, market & consumer insights for Dairy Management. “Dairy products saw a tremendous surge in online buying during the pandemic. With more meals eaten in-home, some consumers were also panicked at the possibility of food and non-food shortages and loaded their shopping carts. The growth online came from new customers to online shopping as well as those who previously purchased.”
In-restaurant dining was also curtailed which also fueled additional meals at home.
Retail sales were down before, but then when COVID hit, there’s been a continuation of fluid milk consumption.
“Retail sales skyrocketed, because people started clearing shelves of milk. We’ve seen this trend, because people are learning to cook more things,” said Bjerga, adding, “It’s a good trend for dairy.”
Many link the recent increase in dairy sales volume to people choosing milk products to make more “comfort foods.”
“Dairy is key to the comforting meals that keeps my family and me well-fed and resilient. During this time where families are supporting each other at home with meals and more time together, there is something so comforting about the nutrition and goodness dairy provides,” said Samantha Carter, manager, marketing communications for Midwest Dairy.
It’s a welcome turnaround, after May and June saw both highs and lows in the coronavirus-impacted roller coaster in the dairy industry in the second quarter of 2020.
Dairy Management in its dairy market report produced in partnership with the NMPF, stated that with exports and prices rising, the highs held momentum heading into the year’s third quarter, and began raising hopes that spring’s severe disruptions were effectively offset by producer production cutbacks and federal government assistance. The USDA-reported U.S. average all-milk price reached an almost 11-year low in May, while the daily price of 40# block cheese on the CME cash market reached a record high in June — a record topped in July. Sharp reductions in milk and milk solids production, major government purchases of dairy products for food assistance programs, increased retail sales of dairy products, and a temporary spike in food service restocking purchases rapidly flipped a switch from severe oversupply to substantial market tightness within a span of weeks, dramatically raising milk and dairy product prices.
Among the most noteworthy, DMI reported was an $8.90 per cwt. jump in the federal order Class III price from May to June. The previous largest one-month Class III price increase was $5.17 per cwt. in April 2004. Trade also has experienced rising momentum. Then, U.S. dairy exports in May represented 17.7% of the nation’s milk solids production, the largest ever for the month of May, DMI stated in its report.
“There were 2,100 dairy farms in Kansas in 1983 when we started, now there are 270 dairy farms in Kansas. We think by doing a really good job, taking care of your animals, you can stay in business,” Miller said. “Dairy sales have been surprising to me; they keep climbing. The cows are kind of No. 1, for us. If we take care of them they’ll take care of us.”
For more information, go to http://www.farmers.gov/cfap/data. ❖
— Hadachek is a freelance writer who lives on a farm with her husband in north central Kansas and is also a meteorologist and storm chaser. She can be reached at email@example.com.
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