Dairies Are Dumping Millions of Gallons of Milk While Stores Are Rationing It Due to the Coronavirus. What’s Going On?

Frustrated shoppers have reason to cry over spilled milk.

Dairy farmers are dumping millions of gallons of the stuff. Meanwhile, some dairy products are sold out at many grocery stores across the country, due to intense demand for basic household goods amid the coronavirus crisis.

USA Today reports on one farm in Wisconsin:

“About 7 o’clock Tuesday night, Golden E Dairy got the call that any dairy farmer would dread. They were being asked to dump 25,000 gallons of fresh milk a day because there was no place for it to go as the marketplace for dairy products has been gutted by the closure of restaurants, schools, hotels and food service businesses.

An hour later, the family-run farm near West Bend, Wisconsin, opened the spigot and started flushing its milk into a wastewater lagoon — 220,000 pounds a day through next Monday.”

No place to go? What about empty dairy aisles? Aren’t those better destinations than drainage pits?

Glut Milk?

According to analysts, it is tricky to switch from dead markets to a surging one. As Gizmodo explains:

“…although consumer demand for milk in grocery stores is booming, it isn’t easy for suppliers who normally make bulk products for restaurants to suddenly make the transition and make items for consumers. For example, it would cost millions of dollars simply to install the new equipment required to switch from making barrel cheese, used in restaurants, to making cheese wedges, used by grocers, per Reuters.”

And the coronavirus crisis has made the shift especially challenging, as Yahoo Finance points out:

“Mass closures of restaurants and schools have forced a sudden shift from those wholesale food-service markets to retail grocery stores, creating logistical and packaging nightmares for plants processing milk, butter and cheese. Trucking companies that haul dairy products are scrambling to get enough drivers as some who fear the virus have stopped working. And sales to major dairy export markets have dried up as the food-service sector largely shuts down globally.”

Another issue is that it is illegal to sell unpasteurized milk in many states, Wisconsin included, so if dairy processors aren’t buying it from farmers, it goes to waste.

And farmers have narrow time windows to solve all these problems, because milk is so perishable.

It all adds up to a glut of milk at the dairy even while there are shortages at the stores.

The Price Is Too Darn Low

The nasty little virus that is upending our lives bears much of the blame, but misguided policies are making a bad situation worse.

Grocery stores could take up more of the slack if they were free to price and sell milk according to consumer demand. But, laws against “price gouging” keep the retail prices of dairy products artificially low during a demand surge. Too-low prices encourage hoarding, which leads to shortages. It also limits the profits for selling dairy.

If a store were free to charge market prices, however high, it would discourage hoarding, prevent shortages, and earn higher profits. The higher profits would increase the grocers’ own willingness to pay for dairy products. This increased demand would ultimately translate into higher prices for farm milk, making it more affordable for farmers to bring their milk to market.

Since they can’t charge market prices, stores instead prevent hoarding and shortages with purchase limits, which, among other bad effects (like punishing large families), reduce dairy sales and make the milk glut even worse.

A Spoiled Industry

It should also be noted that American dairy farmers have been frequently dumping milk long before the coronavirus. In 2016, The Wall Street Journal reported that:

“More than 43 million gallons’ worth of milk were dumped in fields, manure lagoons or animal feed, or have been lost on truck routes or discarded at plants in the first eight months of 2016, according to data from the U.S. Department of Agriculture.”

Dairy farmers blame diminishing demand. Liquid milk consumption has been declining for decades. And foreign demand has suffered thanks to the recent trade wars.

But these factors have been present for a while now. Why does the overproduction persist? Why haven’t the farmers adapted by partially shifting to other agricultural products? A downward shift in demand does not alone explain chronic overproduction. For that, governmental “support” for the dairy industry is more likely to blame: subsidies, government-provided “margin insurance,” minimum prices (USDA “marketing orders”), bailouts (like massive government purchases of surplus dairy products), and more.

In the wake of the coronavirus, such market-distorting “support” looks set to expand even further. As Gizmodoreports:

“This week, dairy groups representing the Midwest wrote to the U.S. Department of Agriculture (USDA) and asked it to provide direct assistance to farmers and expedite the purchase of additional dairy foods amid the “unprecedented disruptions in supply and demand” caused by the coronavirus pandemic. Congress allocated $9.5 billion for agriculture producers impacted by the crisis under the CARES Act, the $2.2 trillion dollar coronavirus economic relief bill, among others.”

During the Great Depression, government interventions impelled farmers to destroy crops and livestock even while American children were suffering from food deprivation and malnutrition. As the coronavirus lockdown continues to hogtie the economy, and as the government gets even more deeply into agriculture’s business, let’s make sure history does not repeat itself.

Until the government starts respecting farmers enough to let them stand in the market on their own two feet, there will be a lot more spilled milk to cry over.

https://economics21.org/will-coronavirus-spike-health-insurance-premiums

You would think Government would subsidise this and get free milk to needy families during this crisis instead of wasting this?

It’s not just milk, they are dumping out. The farmers are having a difficult time selling their fruits and vegetables. Because, either stores are closed. Or/and people are not buying as much as they would be. So, the farmers are left to waste them.

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We have to find a way to not only help them but help in getting their other foods to the market. Farmers are the most important aspect of our lives, they start going then society collapses! I can’t stress the importance of this issue enough!

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There is a significant market opportunity here. In the area of dairy production, if these producers were partnering with companies that are equipped to provide long-term shelf storage solutions for milk then they wouldn’t need to dump millions of gallons of product into the ground. Plenty of these companies exist and they are actively looking for product.

In terms of vegetable and produce production, this is an incredible opportunity for these producers to partner with businesses that specialize in pickling and preservation. There is no need to waste any of this product and any company that does isn’t looking for new business opportunities in this current environment.

Instead of going grocery shopping, I’ve had a great deal of luck calling restaurant distributors who are more than happy to offload their current inventory to me at a fraction of what they would charge restaurants. They have too much product on hand. I’m not going to name who I have been calling but depending upon where you live there are a multitude of opportunities out there to provide for your family at a relatively low cost.

No matter how hard this situation gets, there is always opportunity.

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I wish you would post most often! You are such a wealth of information! Thanks for sharing this insight.

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Yes, I agree.

My point was that, they could be donating to various food banks. Yes, they are going to take a hit when it comes to consumer buying. But they will make it uo as they usually do - when this is all over and done.
But instead of wasting the food an dumping them, they could be donating. JMO

Sure thing and thanks for the compliment. I don’t like to brag – but for context – I did just purchase 7lbs of Wild Boar Prosciutto from a local fine dining supplier on Friday - it’s been a wonderful snack, especially with the wheel of imported French Brie they gave me for free just for buying the boar. Believe me. These restaurants suppliers are desperate for customers right now. If you need food, use the internet and give them a call.

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Believe it or not there are a wide range of regulations in place that govern what food banks can accept and what they can’t accept. A lot of those regulations are geared towards not accepting bulk donations from businesses. I’ve done a lot of charity work in my day and these charities don’t want to give the appearance of being owned by one particular company or another. In a situation like this I would think that they would throw their ideals out the window, at least temporarily. They need all the help they can get and they shouldn’t be too selective.

@Dr_Manhattan @Patriot Today, I called Domino’s Pizza and ordered myself 3 Steak and Cheese Pizzas. I am always for giving business to anyone. But I don’t want to eat out every single day. Lol

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Now is the time that you can learn to cook exquisite meals for yourself and your family. If you are solo, then now is the time to learn how to cook great tasting meals that are exceptionally healthy. Seriously, look into the restaurant supplier suggestion that I mentioned. You won’t need to depend on places like Domino’s when you are being delivered some of the finest meats, cheeses, and produce on the market at a fraction of the price. There are a lot of recipes out there to help you take those wonderful ingredients and create a spectacular meal for yourself. Believe me, the quality of ingredients in food truly does matter and you will feel better after rewarding yourself with something special.

God you are making me hungry! One thing that sucks about living in Asia is really good pizza is very difficult to find!

Anyway, I don’t want to inject bias into the discussion so I’m going to refrain from posting…as usual. I look forward to what all of you think.

Here is that Wild Boar with some Goat cheese. There are much worse ways to ride this thing out. Ok…now I’ll try to stop :wink:

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That looks ridiculous. Damn.

Yes, there are. My neighbor works for the Harry Chapin Food Bank and has told me stories of such. Rather eye opening.

Before I sent employees home to hunker down (they are still being paid, just not the overtime they are used to getting) I bought a good supply of groceries for each family.

I wouldn’t mind exploring this for round two.

Thanks for the tip. :+1:

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When oil refineries began production in the mid-19th century, the primary goal was the extraction of kerosene to fuel the lamps whose popularity was only superseded by electric lighting decades later. In the meantime, kerosene production resulted in a highly flammable volatile by-product called gasoline. Until the advent of the automobile, gasoline was simply a waste product which was disposed without a second thought.

Ryan Elbe at Golden “E” Dairy farm in West Bend said they got a call from Farmers of America on Tuesday, asking them if they would be willing to dump their milk.

They are being told to dump milk by their support organization in an effort to hold the price steady.