With so much milk being produced in the United States this
spring, coupled with the sudden halt for dairy product demand, Dr. Mark
Stephenson says one of the best solutions for saving the industry is to cut
production as quickly as possible. The director of Dairy Policy Analysis at the
University of Wisconsin-Madison discussed the idea on Tuesday during the
inaugural Dairy Signal program, an online educational initiative launched by
the Professional Dairy Producers of Wisconsin.
Dr. Stephenson says there has been a larger than normal
spring flush in milk production in the U.S., though Wisconsin's output has been
down because of last year's poor feed quality. He feels it will be difficult to
stop the market price free fall without action on the farm level--which he
estimates would require a 5- to-10 percent reduction in supply.
"Farms can either dry up cows that have mediocre
performance or cull some of the herd," he suggested. "However, the
meat sector is also seeing its own share of disruptions because of labor
shortages and a flood of animals going to market. In fact, last week one of the
region's largest meat processing plants closed down because of COVID-19
spreading within their workforce."
He also indicated that farmers should be prepared for the
unexpected for months to come.
"Markets hate uncertainly and we are in the midst of a
pandemic not seen in over 100 years. If that's not uncertainty, then I don't
know what it. That's causing limits up and limits down in the market as people
are trying to figure this out."
When looking back at other volatile market swings of the
past, Stephenson noted that even a small one-percent change in production or
consumer buying trends had a seismic effect on farm-paid prices. With the
Coronavirus turning the entire world upside down, everyone from the producer to
the consumer will need to hold on for a wild ride, he said.
Chad Vincent, CEO of Dairy Farmers of Wisconsin, also
appeared on the online program Tuesday. He hopes to see state and federal
programs help move some of the surplus products to people in need, which
includes people just now applying for unemployment benefits.
"We just saw a 70 percent drop in dairy sales in past
few weeks as more than half of all restaurants have closed their doors,"
Vincent said. "We need to face the fact that our eating habits are
different at home than when we go out to eat. This is affecting our market and
it's not that easy for processing plants that make cheese to convert over to
fluid milk to supply grocery stores that are putting limits on the number of
gallons consumers can buy in one trip."
Before concluding, PDPW Director Shelly Mayer gave an
emotional statement to consumers in an effort to help them understand the
crisis taking place on many dairy farms.
"When you think of words like 'dump' or 'dispose,' we
often associate these words with 'garbage' and that makes us feel very sad. We
as farmers harvest nutrients from the fields... in the form of corn,
soybeans... and our cows turn that into nutritional food for our bodes. If we
need to dump our milk, we are basically putting those nutrients back into the
fields and not just throwing it away like garbage."
Dr. Stephenson also encouraged farmers who are feeling down
and depressed to talk with someone; whether it be a family member, a professional
councilor or the Wisconsin Farm Center.
"Farmers are the most resilient people we know. This is
really difficult timing because we just concluded five years of low prices and
2020 was supposed to be the year we saw a turn-around. But you need to
understand that this is not your fault."
The Dairy Signal line-up continues at noon on Wednesday with
presentations by Dr. David Kohl, professor emeritus with Virginia Tech, and
Jason Karszes of Cornell University's PRO-DAIRY program. They will talk about
economic strategies dairy farmers can use to manage their businesses during
challenging times.