WCMA Notes: Truths Emerge in COVID-19’s Upheaval

Posted By: John Umhoefer WCMA News,

The largest social and economic upheaval in eighty years continues to grip America and the world. It’s hitting us with truths bared by its extremes, but Job 1 now is to jab, bob and weave, because the fight isn’t over yet.

A dairy processor’s first priority remains the health of their workforce. Set aside the noise of states fighting to open or close businesses: in tight quarters, COVID-19 is readily transmitted and processors should be obsessively monitoring the health of their team, distancing workers as much as possible, taking up mandatory use of facemasks (and protocols for cleaning them) and disinfecting every surface in and outside of processing areas.

Useful protocols and SOPs regarding your workforce are readily available from IDFA, Wisconsin Food Safety Alliance and other multiple other sources. Use them. In general, adjust your employment policies to make your workers confident that they can report symptoms, stay home if ill and still be supported by their employer. Immediately send home workers with symptoms of illness, such as elevated temperature. Prioritize distancing and sanitation over productivity.

Economists will study these months for years, but some facts emerging in this upheaval have immediate utility.  Here’s a few.

  1. Dairy is an absolute must for consumers. Losses in the foodservice sector – conservatively estimated at -22 percent for 2020 by Technomic Inc. – exceed dairy gains at retail. But that’s just a lack of access. Consumers are buying cheese and other dairy like gangbusters at the grocery store – overall dairy sales are up $2.2 billion in 2020 vs. the same time in 2019 and cheese is the big winner, accounting for nearly half of the new gains in dairy sales.

All dairy products at retail are up an impressive 13.8% through April 19. Compare that to before March when “pre-COVID” dairy sales in 2020 were up only 2.3% over the previous year. Cheese sales (in dollars) this year are up 19%; butter up 27% and bottled milk up 11%.  There’s proof of comfort eating in the fact that ice cream sales are up 16% and yogurt only 3 percent this year.

Recent cheese sales data (by volume) reflects anecdotes from cheese manufacturers and processors: the burst of panic buying, still strong into April, eased back to 8.3% growth in the week ending April 19 (compared to that week the previous year). Expect this single digit growth in the months ahead.

  1. Supply management doesn’t need a government program. Dairy manufacturers worked tirelessly in March to find homes for fresh milk as a wave of cancelled orders swept over the industry from restaurant chains, school systems, destinations and other foodservice outlets. As April arrived, 47 states had closed all dine-in restaurants and schools were empty. Cheesemakers began turn to long-hold cheese – made and stored without a buyer. But reports of milk lost with no sale grew to encompass at least 22 states.

Each cooperative and proprietary dairy plant faces unique marketing conditions and the unique ability to communicate directly with their dairy producer partners. Many manufacturers have urged farms not to grow – to hold production steady.  Some have called for 10 percent to 20 percent cutbacks in production.  The loss of 25 to 50 percent of foodservice sales amounts to billions of pounds of lost cheese sales over the course of a year. Milk production as usual is too much milk.

  1. Dairy farmers, processors, regulators and policymakers in Washington collaborate well in crisis. From its unique position alongside the dairy industry, Wisconsin Cheese Makers Association has interacted with all these groups. Communication between producers and processors has been extraordinary and candid, and decisions about supply have been swift.

In Wisconsin, regulators turned to industry, seeking ways to streamline licensing, withdraw inspections to allow distancing, build a protocol for unprecedented milk disposal, extend time limits on licenses and more. Dairy lobbying for direct payments for producers and aggressive dairy product purchases by USDA were almost immediately taken up by organizations across the nation, producer-led and processor-led, and anchored by International Dairy Foods Association and National Milk Producers Federation in Washington. Lessor crises have seen these groups splinter.  Not this time.

  1. Supply chains are complex, fragile and interwoven. There are too many examples here to list, from a lack of long-haul drivers to dwindling packaging supplies and ingredients. But one example illustrates the unexpected interaction of supplies. Carbon dioxide gas, the best inert gas to seal in packaged cheese, meats, beverages, (beer!) and nearly every other foodstuff, is in short supply.

Travel is drastically reduced in the U.S. and the ethanol industry is idling production plants across the Midwest. Forty-seven ethanol plants are the key suppliers of food-grade carbon dioxide gas, a byproduct of fermentation. Seventeen of those plants have been shut down, and others cut back. Cheese packagers face rising surcharges, falling allocations and new transportation fees as limited carbon dioxide is moving hundreds of miles to reach customers. The situation is becoming worse, not better.

  1. Dairy processors can turn on a dime. When milk began to back up in March, dairy manufacturers shared anecdotes of finding new buyers for fresh milk thousands of miles away, changing their product mix in anticipation of months of pain ahead and contacting food banks and schools long before USDA imagined its new feeding programs.

When WCMA contacted members in mid-March to explain CDC’s new social distancing guidelines, members shared plans already in place – from split shifts to staggered break times and from redoubled sanitation to new paid leave programs. Dairy’s reaction began in days, and continues with each new protocol from FDA, OSHA and CDC.

On March 18, WCMA proposed a set of Standard Operating Procedures for the dairy industry to handle COVID-19 in the workplace.  By March 22, Adam Brock from Dairy Farmers of Wisconsin and Marianne Smukowski from Center for Dairy Research had SOPs in place alongside employer guidance and FAQs from WCMA.

This crisis has bared truths in the dairy industry. And many of them are very encouraging.