Prices suffering, but milk still flowing in Minnesota

Noah Fish
Forum News Service

Cases from primarily Wisconsin farmers dumping milk at the end of March amid the coronavirus pandemic got the attention of the entire dairy industry by the start of April.

The situation prompted a handful of Wisconsin’s biggest farm organizations to request for the U.S. Department of Agriculture to use emergency COVID-19 funding to buy milk, butter and cheese from producers as well as a number of other measures of direct assistance.

Lucas Sjostrom, executive director for the Minnesota Milk Producers Association, said the disruptions in the industry are both “complex and simple at the same time,” but it starts with the loss of a major portion of the market for producers.

“Basically we’ve lost 20% of the home for our milk in the last 30 days,” said Sjostrom.

About a third of milk in the U.S. goes to restaurants, schools and industrial institutions (defined as the food-service industries), and Sjostrom said he’s heard from processors that commerce is down between 60-70%.

And current exports of U.S. milk to countries like China and Mexico are “not quite at zero, but pretty close,” said Sjostrom.

What complicates the ability to gauge the situation is that sales in dairy actually went up at the beginning of the outbreak.

“In grocery stores, we did amazing business,” said Sjostrom.

According to mid-March data from the MMPA, fluid milk was up about 50%, frozen pizzas were up around 150%, and cheese and butter were both way up as well.

He said that business makes up for some of the ground lost to food-service industries and exports, but not enough to balance out.

Futures quotes for Class III milk, which is relevant to Minnesota because around two-thirds of the state’s milk goes to making cheese, were $17.73 at the end of January. As of April 7, the price had dropped to $12.58.

“Just kind of a punch in the gut for the dairy industry,” said Sjostrom of the drop.

Federal relief

The MMPA is in support of proposals like the one from the National Milk Producers Federation to Ag Secretary Sonny Perdue, which calls for a USDA aid package for dairy farmers to help weather the poor futures markets.

The proposed package from the NMPF to the USDA includes federal purchasing of dairy products for Americans in need, compensation for milk disposal and the re-opening of the Dairy Margin Coverage program.

Sjostrom said that major dairy markets were forced to shut down for the good of public health, and if the federal government wants to keep farms alive it will have to step-in to balance that.

But he said federal action must be done cautiously in order to not distort the markets even more. That’s why MMPA leans toward “paying historically rather than paying going forward”, he said.

No dumping in Minnesota

According to MMPA, there have been no confirmed cases of milk being dumped by Minnesota farmers amid the pandemic.

“Within the state of Minnesota, we know of zero,” he said of farms dumping milk. “And there’d really be no reason to hide it.”

What Sjostrom calls the “doomsday scenario” is if plants start to shut down because staff becomes infected with the virus.

“That’s the scenario we would really worry about there not being enough cash for the processor, whether co-op or private, to pay farmers,” said Sjostrom.

Nicole Neeser is the director of dairy and meat inspection for the Minnesota Department of Agriculture.

The MDA announced March 30 that it would continue inspection services during the state’s stay-at-home order and the entire COVID-19 pandemic.

“There’s a lot of disruption in our food supply right now, and it’s really important that customers know the food they are getting is safe,” said Neeser.

The inspection staff is fully aware of the concerns over processing plants shutting down from staff getting infected.

“Keeping our dairy processing plants operating is a really important thing right now, with a lot of challenges in the dairy markets and just keeping supply chains in tact,” said Neeser.

In the March 30 release, the department also stated that it would be exploring options to conduct virtual inspections. Even before the pandemic, dairy inspectors were expected to follow all biosecurity and health precautions instituted by facilities. Now as the COVID-19 situation has escalated, dairy inspectors will conduct routine inspections via video upon request.

Does that mean inspectors will be getting carried through facilities on laptops screens connected via Zoom call? Kind of, Neeser said.

“One piece is to use some of our technology tools to have the plant personnel essentially just walk around the plant,” said Neeser. “And focus on particular areas of concern, or maybe if there was a problem on a previous inspection that we wanted to verify and get corrected.”

But a lot of the work that goes into inspections is the review of records, said Neeser, which can easily be transitioned to online records.

“In person, we might go to the plant and spend hours looking through their records or computer files,” said Neeser.

But any human-related issues that may arise in facilities inspected by the Ag Department staff are handled by the Minnesota Department of Health, said Neeser.

“We by all means will make the accommodations to keep people safe, but we also need to balance that with the need to make sure our food is safe,” said Neeser. “It’s really important long-term for the health of our industry.”