No plan for this: dairy industry weathers perfect storm

You can plan ahead for how to handle transportation issues, plant breakdowns or weather-related setbacks.

A pandemic, though?

“This situation does not appear anywhere in our playbook,” said Tony Sarsam, chief executive officer of Borden Dairy, in an interview with Farm and Dairy.

The impact COVID-19 had on the dairy was a perfect storm of bad situations. Losing major food service markets while simultaneously seeing temporary demand spike at retailers, all during a time when milk production is naturally on the rise in the spring.

Then there’s the challenge of adjusting farm operations and production lines to keep workers healthy.

“It’s very difficult to have a contingency plan that is all of the bad things happening all at one time and for a sustained period of time,” said Heather McCann, director of public affairs with Dairy Farmers of America Mideast.

Now that the dust has settled, farmers and processors are trying to find a sustainable way forward in this new world.

Cutting back

For some, that means cutting back on production.

Thiele Dairy Farm, in Butler County, Pennsylvania, said in a Facebook post, April 10, that its processor, Marburger Farm Dairy, asked all of its dairies to reduce production by 15%. In that post, it explained to readers the options it had to accomplish that.

“This may sound simple, but you don’t just ‘shut a cow off’ from producing milk,” the farm wrote in the Facebook post.

They could dry off cows earlier than usual. They could cull some cows. They could cut back a bit on feed to reduce production. As a last resort, they could dump milk.

For a small farm milking about 40 cows, the Thieles to figure out the best way to do that without disposing of milk or impacting their herd long term. That’s been a combination of things. They started feeding milk to their calves, instead of using milk replacer formula, a representative with the farm told Farm and Dairy.

They dried off a few cows a little earlier than usual. They may dry off more and cull some cows down the road, if needed.

“As for how it will impact us down the road, time will tell,” the farm said.

Donating it

For others, it’s meant finding different markets for milk, leaning on the goodwill of others.

“We don’t want to dump milk,” McCann said. “That is an absolute last resort because milk on the ground has no value. It’s extraordinarily valuable to folks in need.”

McCann said they’ve not asked anyone in their territory to dispose of milk yet. The Dairy Farmers of America, or DFA, Mideast area covers Ohio and parts of Pennsylvania, West Virginia, Indiana, Kentucky and Michigan.

DFA farms in other areas of the country have not been as lucky. DFA Central asked farms to dispose of milk, and recently sent a letter to its farms announcing a temporary base excess program starting in May.

McCann said they’ve reached out to customers to see if they were willing or able to process milk to donate to regional food banks. Although it costs money to process something to give away, some companies have stepped up, easing the build-up of surplus milk and helping people in need.

Daisy Brand, in Wooster, Ohio, agreed to take DFA milk and donate the processing and packaging to give cottage cheese to the Akron-Canton Regional Foodbank and Greater Cleveland Food Bank, McCann said.

Kroger has a long-standing donation program through its Tamarack Dairy Farm plant, in Newark, Ohio, to donate milk to the Mid-Ohio Food Bank. That program was bumped up to meet the higher demand and increased supply of milk.

DFA Mideast also has balancing plants in its area, one in Michigan and Indiana, that it has been able to use to process extra milk into storable dairy products, like powdered milk. A DFA cheese plant, in New Wilmington, Pennsylvania, has taken on additional milk as well.

The products may not have a market, yet, and are sitting in storage, but at least milk is not being thrown out.

“While we do have contingency plans, this was unprecedented,” McCann said. “So we do have to remain flexible. Every day is an exercise in flexibility. We are working seven days a week to place milk.”

Dumping it

Kevin Spreng had to dump about 6,200 pounds of milk into his lagoon, April 3. He got the call from his milk truck driver the night before, then a call from his Dairymens field rep.

“We were told … it was a short-term solution to get them caught up,” he said.

Spreng runs three dairy farms, in Wayne County, Ohio, milking about 600 cows altogether. Two of his farms are members of Dairy Farmers of America. The other, the one that had to dispose of milk, works with Dairymens of Cleveland, which is owned by Borden Dairy. He’s only had to dispose of milk once thus far.

“Dairymens came to me and said they couldn’t take my milk,” he said. “They’re not the problem. They had to do what was necessary.”

Sarsam said about a third of Borden’s business is schools and restaurants. That all but dried up almost overnight about a month ago. Overall, business is down about 25%, he said.

With some production lines dedicated strictly to the school business, they’ve had to furlough some employees, about 3% of their workforce.

They’ve also had to ask some farmers in Ohio to dispose of milk. It hasn’t been a large amount, but Sarsam acknowledged that any amount of milk dumped is significant to a farm running on slim margins. To find a home for milk, some milk from Ohio farmers is being shipped to processing plants in the South.

“Demand has been a little lighter in the northern part of our region than in the southern part,” Sarsam said.

The national milk brand has a network of a dozen processing plants stretching from Cleveland down to the Gulf of Mexico. They know how to deal with business interruptions. There’s a hurricane every summer that throws things off at their plants down south, he said.

“We’ve never had to contemplate a pandemic or something that shuts down significant customers overnight,” Sarsam said.

Tightening up

Spreng said they’ve tightened things up at his farms, but otherwise haven’t made any big changes to how they operate. They may have dried off some cows early and bumped up their cull rate a bit.

“We’re already managing as leanly as possible,” he said. “Any cuts we would make at this point, for me, personally, are going to go against the high standards of care that I have for my animals.”

He doesn’t want to make any emotional decisions that will come back to bite them later on.

“If we get rid of cows or move them around, anything we do to disrupt normal for those cows is going to be more damaging long term,” he said. “My hope is that when all this levels out … those girls are still at a high functioning level when things do lighten up.”

Spreng worries about the impact this will have on all the hands along the way that go into getting milk to consumers. Dominos keep falling down the line, starting with the processors, then the farmers and next to the businesses that supply and service those farmers.

“We deal with 100 different vendors in a year’s time — tire shops, mechanics, welders, UPS drivers. There are so many businesses out there that the ground zero dairy farmer does business with to produce that product,” he said.

(Reporter Rachel Wagoner can be contacted at 800-837-3419 or rachel@farmanddairy.com.)