The COVID-19 crisis upon Tennessee’s dairy industry has disrupted the supply chain that connects the dairy farmer to the dairy consumer, a dairy specialist at the University of Tennessee says.
In a phone interview Wednesday, Dr. Liz Eckelkamp, of UT’s department of Animal Science and also a dairy extension specialist, said the virus and the public health-focused response to it have caused a change in where and how milk is processed.
Typically, about half of Tennessee dairy output has gone to the food services industry, she said. Because COVID-19 has changed food services practices so much, the dairy industry is having to adjust quickly to new patterns.
For example, she said, grocery stores, whose buying patterns are based on trends, have seen those trends shift.
“Those businesses that usually consume cheeses, milk, butter and other dairy products don’t have the same level of demand,” she said. “That normal stream is severely reduced. Also, schools are closed or conducting classes remotely, so school lunches aren’t there like before.”
Such shifts have simultaneously upped demand for retail dairy products, such as milk sold in grocery stores, and lowered demand for dairy products made and packaged for consumption in restaurants or cafeterias.
So dairy products are still in demand, but the balance has changed.
Eckelkamp emphasized that reacting to that shifting balance is more complicated and nuanced than simply hauling tankers of milk to a different plant than before. All sorts of related changes, some not immediately obvious on first thought, also have to be made.
“It’s taking awhile for the industry to make that shift,” Eckelkamp, great-granddaughter of a Texas dairyman, said.
When half of the dairy market normally aimed at food services suddenly diverts to the retail market, packaging equipment has to be changed and labeling has to meet different legal requirements. Products made and packaged for restaurants and cafeterias cannot be sold as-is as grocery store merchandise.
Also impacted by COVID are dairy-related exports, according to Eckelkamp. In a paper published this month by UT’s animal science department, Eckelkamp wrote: “The dairy industry exports cheese, non-fat dry milk and other products to offset supply that is not used domestically. Since COVID-19, exports have dropped dramatically. One of our major importers is China, and COVID-19 has been a major blow to our exports.”
One problem is that milk processors are not equipped to store an unending flood of raw milk. Eckelkamp said this lack of storage capacity is what has led, in places, to dumping of milk because processors cannot accept new product when they already are at full capacity.
“The harsh reality is. there is only so much capacity,” she said.
‘NO OFF-SWITCH ON A COW’
Meanwhile, dairy farm cattle continue to produce milk apace. “There’s no off-switch on a cow,” Eckelkamp said.
Because bacteria counts double every 30 minutes in room temperature milk, Eckelkamp said, farmers can’t simply store excess milk away long-term for later delivery. This is pushing dairy farmers to find alternate ways to derive value from unsold milk.
Some dairy operations are pasteurizing their milk to feed pre-weaned calves rather than the “milk replacer” usually fed to them. Milk replacer for calves can be compared to baby formula for human infants, Eckelkamp said.
Most dairies, though, do not have the ability to pasteurize on site, and pasteurization is needed to keep milk safe for consumption by calves just as it is for human consumption, she said.
Some farmers even are “land-applying milk” as fertilizer, or feeding milk as part of the “lactating cow ration.”
Another and simpler aspect of COVID-19 that can impact Tennessee dairying, Eckelkamp noted, is that dairy farmers, their employees, families, milk-haulers, and anyone else in the supply chain, are as vulnerable to the virus as anyone else.
“Farmers get sick. Farm employees or their family members get sick. Milk truck drivers get sick. Processing plant workers get sick,” Eckelkamp said. When COVID-19 strikes anywhere along the way, the supply chain from milking barn to final consumer use is affected.
“It’s all connected,” she said.
Even before the viral pandemic, Greene County saw the interconnection of dairy industry elements playing out locally when, on the last day of January, Woolsey & Carter, Inc. ceased milk-hauling operations that started in 1962. “It is a sad day that Woolsey & Carter Inc. can no longer economically pick up and deliver milk,” one of the owners told The Greeneville Sun as the company closed.
That company’s decision was driven by financial impact from the decline of dairy farm numbers in Greene County and nearby areas, even before COVID-19 came on the scene.
Asked if she believes the COVID-19 crisis has the potential to be the “final straw” that makes some dairy farmers choose to leave the industry completely, Eckelkamp said it “certainly has potential to make farms get out,” though she hopes most can hold out and keep going.
The key to survival, as always for dairy operations, continues to be finding ways to keep operating expenses as low as possible. The more adept a dairy farmer is at lowering operating costs, the better the odds of staying in business, as Eckelkamp sees it.
“Lower your expenses and you can survive,” Eckelkamp said.
Greene County Attorney Roger Woolsey, one of the owners of the now-closed Woolsey & Carter, Inc. milk-hauling company, said that additional financial strain is the last thing Greene County dairy operators need and only makes it harder for them to stay in business.
What the effect of the COVID crises, especially if it lingers, will be on milk prices will make the difference. “You won’t be able to take a significant dip in milk prices and get by with it,” Woolsey said.
Eckelkamp agrees. For dairy operations, “a decrease in revenue is really going to impact,” she said.
Greene County Extension Service leader Milton Orr also is concerned about the COVID-19 impact, especially on dairy. “Dairy has multiple issues to deal with,” he said.
“We’re hoping this all will be temporary,” Orr said. “Right now everybody is trying to make the best out of a bad situation.”
Local cattleman Bryon Moncier of Sandy Hill Farm in Afton said this week that it’s mostly business as usual for the moment for him, although he is concerned.
“We always struggle, but I don’t think it’s really hit us yet,” Moncier said. “It may not be for a month or two before it starts to affect us. I hope not, but I’m sure it will affect us some as it does everybody else. Hopefully it’s not too bad, but we’ll just have to wait and see.”
Sandy Hill Farm produces milk sold in Ingles stores, as well as beef.
Eckelkamp said that sources of help for impacted dairy operations exist or are being developed to help keep dairy businesses alive through the current time of struggle.
She said that those dairy farmers interested in finding out what resources are available to help with everything from financial issues to mental health support may access information by Googling the phrase “UT dairy,” then clicking the “UT Dairy – UT Institute of Agriculture – University of Tennessee” link the search brings up.
On the UT Dairy page, click the “Market Outlook” link. At the bottom of the accessed page are links to about 40 programs and information sources, including many directly related to COVID-19 issues in agriculture and ag business.
‘IT DOESN’T LOOK PRETTY’
Glenn Tweed, operator of a 350-acre dairy farm on Lola Humphreys Road in Limestone, said Thursday the immediate outlook for milk producers is not promising.
Tweed, a dairy farmer for 36 years who previously had a farm in the Ottway community, is one of the directors of the 98-member Appalachian Dairy Farmers Cooperative, which includes farms in Tennessee, Virginia and North Carolina.
“It’s the worst situation I’ve seen in 36 years as far as financial. I’ve been milking for 36 years, and I’ve never seen it this bad,” Tweed said.
Tweed has about 600 head of cattle on his farm in Limestone and several nearby locations. He and other producers in Washington and Greene counties supply milk to Ingles Markets.
Future prospects for dairy farmers during the COVID-19 pandemic were discussed last week during a conference call among cooperative members.
“There’s a possibility we would have to dump milk. I don’t think it will come to that, but they didn’t rule it out,” Tweed said.
When the coronavirus pandemic was first announced, Tweed said the public was buying up all the milk it could.
“The first week or two, they had to order 40 loads from Michigan to keep up. Now, they’ve got too much,” he said.”
Tweed anticipates the price paid for milk will drop in the uncertain economic environment spurred by the COVID-19 epidemic.
“It doesn’t look pretty the next three months,” he said. “It will be terrible price-wise.”
Tweed anticipates getting paid less for milk than when he started out dairy farming decades ago in Greene County.
“The milk market is very, very complicated,” he said. “The Class 3 price for milk is going to be a couple of dollars cheaper than what I sold milk for in 1984.”
The COVID-19 pandemic could have devastating long-term effects for some local daily farms, Tweed said.
“Some of them aren’t going to make it. I can tell you for a fact, they’re just not,” he said. “This is not just here. This is across the U.S.”
Farms in the Southeastern U.S. market are probably the best-positioned to weather the pandemic, Tweed said.
Tweed’s Limestone dairy farm produces about 14,000 pounds of milk a day. About 230 cows are milked twice daily, he said.
“We will get some funding help,” said Tweed, who is confident his family operated farm will persevere.
ADF Cooperative members await word from the government about proposed programs to aid farmers.
“They’re saying they’re going to (create) some kind of a payment system. They’re working on some details. As a rule, the government does pretty good with dairies,” Tweed said.
Greene County once had a thriving dairy farm economy. Tweed estimated there are currently only 10 to 12 left in the county, and about five dairy farms in Washington County.
“In Greene County 30 years ago, I’ll bet there were 150 or more,” Tweed said.
Tweed has heard from other farmers that the coronavirus pandemic also is impacting local beef producers and other agricultural sectors.
“They’re taking a beating. It’s not good. Corn and soybeans are also down,” he said.
Milk is hauled from Tweed’s farm by a private contractor to a processing facility. Tweed said if food shortages occur due to the pandemic, it won’t be because of farms underproducing.
“It’s not coming from the farm. There may be problems in the processing process,” he said.
Tweed said if the coronavirus crisis forces the closure of dairy farms, it could lead to long-term supply issues.
“If a car dealer closes, another one will take its place, but once a dairy closes, it rarely will open back up,” he said. “When it’s all over and some dairies go out (of business), there might be some kind of a shortage.”
Tweed said that for agriculture, the coronavirus pandemic has no comparison in living memory.
“I would say this is the worst thing to come along since the Depression and World War II,” he said. “Everybody around here doesn’t want to see anybody quit. They want them to stay in business.”