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Megan Nichols
FST Soapbox

COVID-19 Led Many Dairy Farmers to Dump Milk

By Megan Ray Nichols
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Megan Nichols

Much of the news coverage surrounding the COVID-19 pandemic mentions infection numbers and fatalities. Those are undoubtedly important for showing parts of the overall impact. However, it’s easy to overlook the ramifications felt by some professionals. One recent example concerns the instances of dairy farmers dumping milk.

Numerous Factors Contributing to the Problem

The pandemic drastically and dramatically disrupted life. Many of the associated changes affected milk producers, but perhaps not in the ways people expect. As schools closed and restaurants operated on delivery or a takeaway-only basis, the demand for milk typically consumed in the food and educational sector went down.

Consider, too, that the pandemic forced the closure of enterprises that did not necessarily serve large quantities of milk every day but still likely placed ongoing orders with suppliers. For example, a daycare center might give toddlers boxes of dairy beverages each day during snack time. Coffee shops often add milk to their lattes or set out bottles for people who want to put some in their coffee.

When coronavirus cases emerged in the United States, many people panicked and flocked to grocery stores for essentials. Milk is often one of the staples people buy before winter storms hit, and they wanted it to prepare for the pandemic, too. One Target store in New Jersey sold out of its entire stock of milk in only five minutes. Stores responded by imposing per-person limits on the product.

If the demand exists, what caused the milk surplus? Part of it boils down to a lack of space at milk processing plants. A related issue is that processors typically serve particular markets. One might cater to retail buyers while another primarily addresses needs in the food service sector. They lack the infrastructure to pivot and begin accepting milk orders from a new type of customer, particularly if the milk-based product is substantially different, like sour cream versus ice cream.

A First-Time Phenomenon

Farmers discarding milk is not unheard of, but it’s not something many producers do regularly. Andrew Griffith, a professor at the University of Tennessee, said that some farmers had to do it recently for the first time in careers spanning decades. He explained, “It’s not that [dumping] hasn’t occurred from farm to farm.” Adverse weather conditions can delay pickups, and unexpected supply spoilages might lead to too much milk.

“But we’re talking about a level of dumping that is not common at all. There [are] a lot of farmers that are experiencing dumping milk for the first time in their 30- or 40-year careers,” Griffith said in an article published on The Counter.

The highly perishable nature of milk poses another problem contributing to the milk surplus. That aspect hit dairy harder than some other types of agricultural goods. People could put grain into silos, but storage is more complicated for dairy products.

Any exposure to higher-than-recommended temperatures causes spoilage. The subsequent risk to consumers means farmers must throw it away. Cold storage facilities are essential for the dairy industry. Statistics from 2018 indicated an average of 10.67 cents per kilowatt-hour for energy consumption at commercial facilities. However, cold storage facilities operate 24/7, so their energy needs are often higher than those of other commercial buildings.

Cows, dairy, farms
The coronavirus is only one of the challenges likely to impact the dairy industry in the coming months and years. Dairy consumption has been trending down for years. (Pexels image)

The delicate nature of the product is another unfortunate aspect that may lead to dumping milk. If a processor has no room to accept the raw goods, there’s nowhere for them to go. In April The Wall Street Journal reported that in one week, producers threw out as much as 7% of the milk in the United States from that period. The same story highlighted how a specialty cheese factory saw sales of its chèvre and ricotta drop by 95% in one day.

Coping With Dairy Industry Fluctuations

The coronavirus is only one of the challenges likely to impact the dairy industry in the coming months and years. A Statista chart profiles the progressive decline of milk consumption in the United States. The average amount of milk per person in 1975 totaled 247 pounds. It plunged to 149 pounds by 2017.

There’s also the issue of people showing a growing preference for plant-based milk alternatives. One industry analysis tracked sales of traditional and oat milk during mid-March. Purchases for the first category rose by 32%, while oat milk sales soared by 476%. A potential reason for that huge increase in the latter category is that supermarkets sell shelf-stable milk alternatives. Those often stay in date for months when unopened.

People can get them in the refrigerated section, too, but they may have preferred not to as they cut down their shopping trips due to COVID-19. Consumers also noticed the increasing number of milk-like beverages made from hemp, hazelnuts and other options. If a person tries one and doesn’t like it, they may try a different option.

Despite those challenges, some dairy farmers anticipated favorable trends—at least before the coronavirus hit. Producers get paid per 100 pounds of milk. Katie Dotterer-Pyle, owner of Cow Comfort Inn Dairy, said 2013 was a particularly good year for the rates. Back then, farmers received about $30 for every 100 pounds, although the price has stayed at approximately $17 per 100 over the past two years.

When Might the Milk Surplus Ease?

This coverage emphasizes the lack of a quick fix for the dairy industry strain. As restaurants reopen, that change should help address the problem, but it won’t solve it entirely. Some enterprises refocused their efforts to better meet current demands. One Dallas-based plant that handles dairy products more than halved its output of cardboard milk cartons and increased production of whole and 2% milk for the retail sector. It is now back to normal manufacturing runs.

As mentioned earlier, though, many processors can’t make such changes. Dumping milk becomes a heart-wrenching practice for hard-working producers. Many tried to compensate by selling their least-profitable cows for slaughter or making feeding changes to reduce the animals’ production. Some private entities committed to purchasing milk from farms and getting it to food banks. Other analysts say the government should step in to help.

People in the farming community support each other with tips and reassurance, but most know they could be in for a long struggle. As supply chains recovered from the initial shock of COVID-19, most people stopped panic buying, and stores no longer set product limits. Things are moving in the right direction, but the impacts remain present.

A Complicated Issue

Many state leaders have let businesses reopen, and others are following. Any step toward a new kind of normal is a positive one that should gradually help the dairy sector. However, much of what the future holds remains unknown, mainly since this is a new type of coronavirus, and scientists still have plenty to learn about mitigating it.

Angela Fernandez, GS1

COVID-19 Puts More Emphasis on Supply Chain Visibility and Data Quality: A Conversation with Angela Fernandez of GS1 US

By Maria Fontanazza
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Angela Fernandez, GS1

The food industry is adapting in completely new ways as a result of the coronavirus pandemic. Retailers are scrambling to keep certain items on store shelves and manufacturers are adjusting their production strategies based on realistic and ever-shifting needs. In a recent discussion with Food Safety Tech, Angela Fernandez, VP of community engagement at GS1 US and FST editorial advisory board member, talks about how companies can improve relationships with trading partners in the face of COVID-19.

Food Safety Tech: What issues do you see happening in the supply chain right now?

Angela Fernandez: Our food supply chain is experiencing overwhelming demand. As an organization that collaborates with both the retail grocery and foodservice sectors to solve supply chain challenges, we’re working with industry on how we can make our supply chain more efficient in the short term, and make it more resilient in the long term.

Consumers are frustrated by empty shelves and the demand created by the pandemic is changing the movement of products. Right now, products are not always accounted for in transit, there are production issues depending on category, and food produced for foodservice outlets like restaurants, schools, and hotels can’t always be easily diverted to a supermarket. The U.S. Food and Drug Administration is lifting restrictions on the sale of food so that it is possible for items that may have been produced for foodservice “sale” to be sold in a supermarket.

FST: In what particular areas are you seeing inventory shortages that are impacting retailers and suppliers?

Fernandez: We’re seeing a couple of different dynamics. For suppliers that produce products for both retail and foodservice channels, we see a shift in reducing production on foodservice items and an increasing manufacturing on their retail product lines. We’re also seeing foodservice suppliers that have not serviced the retail channel previously are now looking to establish new relationships with retailers and recession-proof their businesses. This is not happening as fast as consumer demand for perimeter products like dairy and produce, so we see shortages and products expiring before they can be sold to these new retail customers.

Additionally, food product variation and customization is decreasing. If you think about your own experience going to the grocery store today, or arranging for a delivery, you’re seeing fewer flavors of a product available and fewer brand names you’re familiar with. Suppliers are continuing to shift back to mainstream production of their core product lines just to keep store shelves stocked. I think that’s what we’re going to continue to see—the reduction of customized and specialty items.

For retailers, they have a prioritized the focus on ramping up their e-commerce strategy to relieve the pressure on their stores and service more consumers online. This poses a particular challenge when retailers have limited IT resources and a need to set up a new item supplied from a new foodservice manufacturer that is trying to divert their products to the retail channel to support the demand. And in some cases unfortunately, foodservice suppliers maybe unable to redirect some of their products due to the fact they are not marked for individual sale with the traditional U.P.C. and other retailer requirements.

FST: Is there a better way that food companies, retailers and suppliers can work together during this pandemic?

Fernandez: Food companies can improve the way they work together if they focus on supply chain visibility and data quality. Visibility is key as suppliers are ramping up production on those mainstream products and trying to get them to the proper locations when retailers need them. That’s where I would look at GS1 Standards such as the Global Trade Item Number (GTIN) for product identification and the advance ship notice (ASN) transaction, which lets a partner know when something is ready and being shipped. Global data standards enable the visibility to what delivery a retailer can expect and when, and being able to account for that inventory once it’s inside the DC [distribution center] location so that they can update an online platform. This can help ensure that a retailer has accurate information for the consumer and ability minimize the substitutions that can occur.

The second piece is the data quality aspect—making sure we have the right information around those core items that we are trying to keep stocked on the shelves for consumers who are purchasing those items today. The retail grocery and foodservice industries have been working on making product data more complete and accurate for a number of years, but we’ve seen a heightened focus on it now, knowing that consumers are relying on digital information to be correct since they cannot see the product in person right now. Expanding the data set for the consumer is critical.

FST: What is GS1 US doing right now to help customers better navigate today’s environment?

Fernandez: GS1 US is helping trading partners work with the capabilities they have to implement greater supply chain visibility, improve data quality and ramp up e-commerce operations. Depending on what was already implemented by the manufacturer or retailer, we’re looking at how we can leverage existing capabilities to help partners work together more efficiently to meet demand. How we can help connect the physical product and the digital data, knowing how important that is online right now, not only for trading partners but also for consumers?

One example of how GS1 Standards can be extended is if a retailer is looking to shorten their supply chain and purchase from a local farm. Standards provide a blueprint for supply chain partners to work together in a consistent way. We want to help these companies leverage and extend the standards instead of proprietary systems and abandoning useful processes for item setup, data exchange and point of sale checkout. Those are the types of discussions that we’re having—how GS1 US members can extend the standards that lead to operational efficiency and more easily bring in new partners to help fulfill demand.