COVID-19 shutdowns crashed the dairy market

Cows feeding at Currie Valley Dairy in Preble, New York. Photo by Evan Visconti

By Evan Visconti

Many dairy farms in Central New York are selling their cows to slaughterhouses in response to a crashing dairy market caused by COVID-19 lockdowns.

The pandemic closed many of milk’s biggest buyers, including schools, universities, and restaurants. according to Andrew Novakovic, professor of agricultural economics at Cornell University.

“In the dairy world, cheese took a big hit, but beverage milk took a much smaller hit,” said Novakovic. “A lot of cheese is consumed outside the home–think processed cheese on burgers, blue or feta cheese on salads. Milk, on the other hand, is more normally consumed at home.”

Dairy processing facilities were not prepared for such a dramatic shift in the market. Despite there being a surplus of milk being produced on farms, it took time for dairy processors to fit their facilities for solely retail production.

For example, “the bottling process for gallon containers sold in grocery stores is completely different from the process to fill cardboard containers that go to school lunches,” said Jeff Phelps, a retired vice president of information technology at Dairy Farmers of America.

The factories producing milk for retail stores were already at full capacity when the pandemic started in March. When more people started going to grocery stores to buy dairy, the shelves emptied.

“We had all of this milk and nowhere for it to go but the ground,” said Phelps.

Willie Weinert, owner of Elk Creek Farm in Schenevus, New York, had to sell six of his cows in May in order to cut the farm’s milk production by 15 percent. His dairy cooperative, the company in charge of marketing, distributing, and selling the farm’s milk, told him that only 85 percent of his farm’s milk could be sold; the rest would likely end up getting dumped.

Elk Creek Farm is small compared to many dairy farms: there are 55 milking cows, 50 young stock, and 50 beef cows. Three people work at the farm. But it belongs to the largest dairy cooperative in the nation, Dairy Farmers of America (DFA).

Phelps estimates DFA was dumping 200 trailer tractor loads of milk each week in March as a result of pandemic closings. Each tractor trailer load contains about 60,000 pounds of milk.

The excess milk was dumped into manure pits, large pool shaped vats used to store cow manure, and the farmers were billed for the cost of trucking, according to Weinert.

“We got charged for that milk that was dumped. I’m a small farm, but I got charged $1,200 in my May milk check,” said Weinert.

On top of a bill for dumped milk, the price for dairy dropped significantly. Weinert received just $12 per one hundred pounds of milk (hundredweight) that his farm produced in April. Before the pandemic, Weinert was receiving $19 per hundredweight.

The Federal Milk Marketing Order’s Northeast dairy price for April was $14.92 per hundredweight. The Federal Order is designed to set a standard price for milk according to geographical regions. “If there’s a huge surplus of milk, co-ops are forced to sell it below the federal value,” said Phelps, which is exactly what happened when the pandemic started.

Co-ops like DFA are in charge of what happens to the milk once it leaves the farm. They combine dairy from all of their member farms into four separate classes based on fats, proteins, and solids, according to Phelps.

There are advantages in marketing and overall efficiency when multiple farms combine their milk into one co-op, according to Phelps. “Instead of one farm trying to sell its milk each month, DFA is able to create one big pool of milk and relieve the sales burden from the individual farmer,” said Phelps.

The arrangement between farms and co-ops is essential because “farmers do not have time to be salesman too,” according to Weinert.

Humanitarians believe unpurchased dairy should be donated to those in need, and there are efforts being made by local and state governments to do that.

The problem with donating dairy is that the product is highly perishable. “DFA cannot hand a food bank 200 trailer tractor loads of excess milk and expect them to make use of it. Refrigeration alone would be a nightmare,” said Phelps.

The quick response for many farms is to get rid of some cows and lower milk production to match the decrease in demand.

In order to thin a herd of 624,000 milk cows in New York State, dairy farmers began flooding the market for beef. At the same exact time, COVID-19 outbreaks at major meatpacking facilities halted meat production around the nation.

“When you send an old dairy cow to market you will average $800 to $900 an animal. When the pandemic started, we were getting $200 a cow,” said Weinert.

In some cases, farmers received a bill of $100 to slaughter the animal and render it, because no one was buying the beef, according to Weinert.

Not all dairy farms decided to sell cows. Currie Valley Dairy LLC distributes to a much smaller co-op, the Preble Milk Cooperative, in Central New York. With only a handful of local farms selling to two milk processors, Kraft Cheese and Chobani Yogurt, their market remained somewhat stable.

Dairy cows at Currie Valley Dairy are milked in a two sided parlor three times a day. Photo by Evan Visconti

“Farmers can make as much milk as they want, and in my opinion we are our own worst enemies,” said Weinert. “We’re making too much milk.”

Weinert was the president of Schenevus-Elk Creek Milk Producer Co-op Inc. before it was bought by DFA in 2013. “We had to work with DFA because there just weren’t enough producers buying milk, and that was almost ten years ago,” said Weinert. “In my opinion, this 15 percent cut in cows should have been done a long time ago.”

When changes happen in the dairy market, the farmer ends up paying, according to Phelps. Despite a roughly 40 percent decrease in the price of dairy on the farmer’s end, prices in stores remain consistent.

Dairy prices in retail stores in Syracuse, New York have remained at a steady average of $3.45 for the year 2020. They are up an average of about 10 percent since June of last year, according to the U.S. Department of Agriculture.

“The worst part about farming is you have no control over what you’ll be paid for your product, no matter how well you run your farm,” said Weinert.

In order to avoid dumping milk in the future, Professor Novakovic said manufacturers should “install more equipment so that it is possible to switch from bulkier foodservice packaging to consumer packaging quickly.”

Milk producers should also “diversify their customer list,” according to Novakovic. With more buyers to choose from, co-ops can avoid dumping milk by diverting it to the buyers who are less affected by pandemic shutdowns.

Despite signs that the dairy market is beginning to improve, Weinert is skeptical the price for dairy will go up when he gets his June milk check.

“Everything in agriculture is still taking a major hit. They say the price is supposed to go back up this month, but I’ll believe it when I see it,” said Weinert.

About Evan Visconti 4 Articles
Evan Visconti earned his bachelor's degree from Loyola University Maryland before attending graduate school at Emerson College. Evan is passionate about the natural environment and plans on becoming an environmental beat reporter for a newspaper or magazine.