2020 was looking to be the year of recovery for the dairy industry after five long years of low milk prices. The milk futures were looking strong, we were prioritizing much needed repairs, equipment replacement, hiring of new employees, and more. Things were finally looking up!
Then, what seemed like a matter of moments, everything changed. The COVID-19 pandemic reached the United States and eventually Arizona. A catastrophic series of cascading events is set into motion the likes of which we have never seen.
The second week of March, shoppers began taking notice of the rising Coronavirus warnings and start inundating the grocery stores. In order to keep up with the demand, milk bottling plants start ordering double to triple the amount of milk they normally order in a given week. Arizona dairy farmers have no problem keeping up with the demand. It’s our peak production time or “spring flush.”
The grocers are not able to keep their shelves stocked due to the sheer volume of people changing their purchasing habits by panic shopping. The grocery stores begin placing limits on milk to keep their dairy cases full. By the third week of March, the frenzy dies down but there are still limits on milk purchases at the stores.
Now, bottling plants drastically reduce the amount of milk ordered because their coolers are full. Additionally, restaurants, hotels, and schools are either closed or have reduced their hours of operation thus reducing the amount of milk needed to supply those outlets. Consequently, United Dairymen of Arizona’s (UDA) largest customer reduces their milk order from seven days a week to three. They largely serve the restaurant industry.
To further complicate things, the Mexican Ministry of Health closes their agency which oversees import permits, adversely affecting UDA. Of UDA’s total production, roughly 16% to 17% goes to our export market and of that percentage, 70% goes to Mexico.
All these factors happening so suddenly and severely led to UDA making the difficult decision to immediately reduce the supply of milk by dumping about a million pounds of milk a day or roughly 125,000 gallon of milk daily. (This time, tears do flow over spilled milk knowing that so many families are in dire need.) This occurred for eleven days adding up to about twelve million pounds of milk total having to be dumped. The further downturn in the beef market could also be felt immediately as dairy farmers needed to cull heavier than usual which flooded the beef market.
All Hands On Deck
All hands were on deck to try to mitigate the lost outlets for milk by concentrating on new or expanded outlets including more milk to school lunch sites, more milk and dairy to the food banks, and working with the grocers to lift the limits on milk as well as many other solutions. It’s during these times that we come to a greater understanding of how critical our local food supply is and understanding how important it is to have people on the ground who fully understand the food supply chain and who work tirelessly to identify and find solutions to physical limitations and regulatory obstacles.
Arizona Governor Doug Ducey intervened by writing a letter to Secretary of State Pompeo and Secretary of Agriculture Purdue imploring them to work with the Mexican government to re-open import permits. This has proven to be helpful in that Mexico has begun taking orders for UDA powdered milk. The Governor’s office was also proactive in communicating with Arizona’s farmers and ranchers to be helpful where they could in mitigating solutions.
Some glimmer of light is ahead as UDA’s largest customer began increasing their milk order to make cheese which is storable. A USDA waiver has been enacted allowing our schools to receive different size containers of milk, as well as whole fat milk, and chocolate milk for the school lunch sites which helps get milk to more families.
Through all of this, Arizona never had a food supply shortage, rather we had plenty of supply chain issues that took incredible collaboration to sort out. We got the message out that we would keep Arizona well fed and we have! Farmers and ranchers remain the most innovative, resourceful, and resilient people around. While the days ahead remain shaky for most of our agriculture markets, we are, by and large, a people of hope and faith and we trust in better days ahead! While I may cry for a moment over spilled milk, I quickly wipe those tears away because I know we will get through this and we will be stronger and wiser for it!
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