Nationwide phenomenon impacting local farmers
HORNELL — Friday wasn’t just another day on the farm for Lowell Smith.
The dairy truck pulled up to Smith’s Stock Farms in Hornell twice on Friday, just as it does every other day of the year, but one of those milk loads didn’t make it far. It was dumped in a nearby lagoon, a scene that has been repeated across the country in recent days as the coronavirus tightens its grip on the spigot of the global economy, reducing a flood of economic activity to a trickle.
From Steuben County to Allegany County and around the nation, dairy farmers have been forced to watch their precious product pour away.
"I don’t know how long that’s going to transpire," Smith said. "It’s a long story that’s really involved. There’s many factors. You can’t store milk forever when it keeps coming every day. It’s got to be put in product."
Dairy farms, like countless other industries, are dealing with the impact of the coronavirus on local, national and global supply chains.
Smith’s Stock Farms has a little over 600 dairy cows producing milk every day. They don’t slow down based on market factors. Smith said one daily load from the farm goes to nearby Crowley Foods in Arkport, while the other travels down I-86 to Cuba Cheese. The coronavirus has thrown that calculus out of balance. Students in public schools and colleges have been sent home, some restaurants have shut down and others are getting by with delivery and pickup services.
Add it all up, and the nation’s daily appetite for dairy products has decreased.
"It’s all based on supply and demand," said Jon Burns, of Burns Family Farm in Hornell. "At this point they’re dumping the milk because there’s really no home for it, there’s no processing facilities that can handle the amount of milk because the system is full.
"You can’t just shut the economy down. It’s not just dairy farms and milk, it’s produce and fruits and vegetables. It’s just that milk is highly perishable and kind of a hand to mouth situation. You’ve only got a couple days to get something done with it, where other products can be placed in storage."
Burns hasn’t yet been asked to dump any milk, but he knows it’s a possibility the longer COVID-19 lingers.
"This has been going on for two or three weeks now. It started out more east and it has slowly worked its way this direction," Burns said. "It’s kind of a perfect storm situation."
The dumps have come even as some stores across the country have run out of milk on the shelves and instituted purchase limits. Both Burns and Smith market their milk through Dairy Farmers of America Inc., which addressed the milk dumps in a statement Friday.
"While there was an initial increase in demand at grocery stores as consumers stocked up on many products, like dairy, the retail demand has now dropped. So you should see milk more readily available at the grocery stores in the coming weeks," the organization said. "However, also during this time, foodservice sales rapidly declined due to schools and restaurants closing. Market analysts estimate that around half of butter and cheese consumed is through restaurants.
"These sudden changes, along with other uncertainties, have forced some dairy manufacturers to cut or change production schedules or build inventories. With plants operating at capacity or on a reduced schedule, there is more milk right now than space available in processing plants."
Farmers like Burns and Smith are members of cooperatives that ensure no single operation will bear the brunt of the losses, which will be spread among the cooperative. Burns said he expects dairy farms to receive some type of additional aid from the USDA in COVID-19 stimulus packages, and Dairy Farmers of America said it continues to pay farm operations even if they’re asked to dump their milk.
"Before milk can be sold in stores or turned into product, it must undergo processing. This, in combination with the perishable nature of our product, has resulted in a need to dispose of raw milk on farms, as a last resort," DFA said. "At this time, our family farm-owners continue to receive payment even if they have to dispose of their milk."
Even so, the coronavirus has added another layer of uncertainty to an industry that has struggled in recent years. Smith said the industry has been rocky since 2009 and, aside from one bright spot in 2014, "it’s been pretty dismal since."
"You deal with it as best you can, but your equity is eroding as well as your attitude," Smith said.
Burns was expecting 2020 to be a good year, but the coronavirus dashed those dreams.
"Through better genetics, better feeding technology, grain technology, in hand technology, we have been able to make our animals produce more milk and turn the milk machine on and off. Nationwide, we’ve been able to produce a lot of milk," Burns said. "Fluid consumption has historically been down. The total consumption of dairy products has been down and our market has been flooded, so our prices have been suppressed. We were going into 2020 looking like it was going to be a pretty good year, maybe an average of $18-19 per hundredweight, which for the last 3-4 years that’s a really good price. Then this coronavirus came along and shut the economy down, and it really has affected the supply chain, not only of milk but a lot of products out there."
Farming remains the backbone of many rural areas across the nation. When farmers struggle, the impact is felt throughout the local economy.
"Being in a rural area, whether it’s Allegany County or Steuben County, agriculture plays a big part, whether it’s dairy farming, beef farming or crops," Burns said. "It’s a rural area and that’s a lot of what you’re land base is, a lot of what you’re tax base is. The majority of the landowners are farmers and they’re paying a lot of taxes. When they are fighting to make ends meet, some of those things don’t get done."
Burns, for one, sees a silver lining in the milk dumping. In the past, surplus milk has been turned into powder, stored in warehouses and rolled out if there’s a milk shortage. The dumping might help boost farmers’ bottom lines down the road, he said.
"By making the decision to dump this milk, it’s a terrible thing to see and it’s all over social media, everybody’s upset, stores have limited milk, but demand has caught up and now the system is flooded with milk," he said. "By the cooperatives making the decision to dump the milk, one positive is it’s not getting made into this milk powder. It’s not going to be stuck in the system and stored in a warehouse somewhere, and the milk price isn’t going to stay suppressed. In the longterm it might help us with milk price.
"I’m more concerned about them shutting down the economy the way they did rather than dumping a few loads of milk here and there."