Columnist Claire Morenon: Dairy farms and COVID-19

Daily Hampshire Gazette, June 22, 2020

The spread of COVID-19 has brought new and immense challenges for farmers across the country and for our entire food system.

The sudden closures of schools, restaurants and workplaces, and the immediate need to implement new safety measures, have put unheard-of pressures on farms to make rapid and costly changes while facing an abrupt loss of income. Local farmers have responded deftly, but this crisis is still unfolding and the long-term impacts on local farms remain to be seen.

Dairy farms in our region have faced the same challenges as every other farm, but within a unique context. Most of the milk produced in Massachusetts — totaling 22.3 million gallons last year — is sold into a regional wholesale market that bottles and processes milk for sale within the Northeast. This is a system that works: it swiftly moves high volumes of milk from farms to processing facilities and then to grocery stores, schools, and your own refrigerator with great efficiency and very little waste.

The problem, and the factor that puts dairy farms into a uniquely perilous position among their farming peers, is pricing. In recent years, dairy farmers have not been paid enough to cover their costs. The baseline price for milk is set on a federal level, based on how demand for a range of dairy commodities interacts with supply. In recent decades, due to a variety of global market forces, the price paid to farmers for their milk has stagnated. This has created a ruinous gap between farmer income and costs.

Going into 2020, the industry outlook was improved. Recently, milk processing co-ops have started instituting supply management systems with the goal of managing milk production against projected demand. Agri-Mark, the farmer-owned co-op that makes Cabot products, had just instituted such a program in January of this year.

Then COVID-19 hit, pushing dairy prices to near-record lows. Catherine de Ronde, director of economics at Agri-Mark, explained. “COVID-19 wiped out dairy demand. Approximately 50% of dairy products in the U.S. go to food service outlets — schools, restaurants, etc. — all of which were lost overnight. Projected annual revenue for the average Northeast farmer fell by about 30%, or $200,000, in a matter of weeks.”

It costs Massachusetts farmers upwards of $20 to produce a hundredweight, which is the standard industry measure: a hundred pounds of milk, equaling 11.6 gallons. This spring, prices bottomed out at $12 per hundredweight.

This story has played out across the food system. Supply chains that are set up to provide products to schools and restaurants can’t be immediately adapted for grocery stores and home kitchens. In the earliest days of the pandemic, farmers found themselves unable to move product while shoppers experienced shortages at the grocery store. Changing production lines from packaging for food service to packaging for retail is an enormous expense, and in today’s swiftly changing circumstances there’s no guarantee that making such an investment would be worth it in the long run.

This challenge affected the farms that process their own milk, as well. Jessica Dizek of Mapleline Farm in Hadley, which bottles its own milk for both food service and retail, said, “Our sales are way behind where they were last year, but because we’re smaller and don’t offer that many packaging variations anyway, we can be more flexible. We’re doing way more half-gallons than we ever have before.”

In response to the sudden drop in price, milk processors instituted swift supply management changes. Agri-Mark farmers were asked to cut production by 5%, farmers selling to Dairy Farmers of America cut their production by 15%, and prices have stabilized. These rapid reductions in production represent painful losses for farmers and weren’t undertaken lightly, but it enabled price recovery that will, hopefully, sustain them.

De Ronde says, “Our board, made of up 14 farmer-owners, developed a whole new program within three weeks. It’s a truly remarkable task that they were able to do, and the silver lining of all this is that we’re going to be more prepared to deal with changes going forward because we had this experience.”

This crisis is not over, and dairy farmers are not resting easy. Darryl Williams, one of the owners of Luther Belden Farm in Hatfield, said, “It’s been a bit of a rollercoaster. We’re waiting to see what’s going to happen because we just don’t know. We’re not going out and spending a lot of money right now, we’ve made some cost-cutting measures, and fortunately we’ve gotten some support through CFAP, a federal coronavirus program for farmers, and through crop insurance.”