The trade war has battered US farmers over the last several years only now to be sucker-punched by COVID-19, which has transformed how Americans eat, resulting in massive food gluts across the country, reports The Wall Street Journal.
With at least 95% of Americans under government-enforced stay-at-home public safety orders, restaurants have been forced to close. Only a few are providing curbside pickup, but even then, many Americans do not trust other people preparing their food.
We've been documenting the state of the restaurant industry, on a state by state basis, now showing traffic is down 100% in nearly every state for the first seven days of April.
Quarantines have forced Americans out of restaurants and into supermarkets over the last month, resulting in a massive food glut for farmers and food companies. Now the agricultural industry must reduce output as sales to restaurants collapse:
"Farmers and food companies across the country are throttling back production as the virus creates chaos in the agricultural supply chain, erasing sales to restaurants, hotels and cafeterias despite grocery stores rushing to restock shelves. American producers stuck with vast quantities of food they cannot sell are dumping milk, throwing out chicken-hatching eggs and rendering pork bellies into lard instead of bacon," The Journal notes.
Many of these companies have been supplying the restaurant industry, will have difficulty reworking supply chains towards supermarkets. This has already forced many farmers to reduce the acreage of planted vegetables and trim their flock of chickens this month as gluts continue to materialize and weigh on spot prices.
Mississippi-based Sanderson Farms Inc. told The Journal that restaurant demand for its agricultural products had been halved since the virus outbreak.
"When you have panic in the marketplace, weird things happen," said Tanner Ehmke, who studies agricultural markets for farm lender CoBank.
Dennis Rodenbaugh, executive vice president at Dairy Farmers of America, said consumers had changed their eating habits during the pandemic, "and it's rippling back right to the farm gate."
As much as 7% of all US milk produced last week was dumped, said Rodenbaugh, as he warned with restaurants shuttered, the glut will get even worse.
We are dumping milk in South Florida because there is no home for it. We still have to feed and care for our cows, and our farmers are still milking cows, in hopes that we can sell that milk in the future... #stillfarming pic.twitter.com/tn4dpUBuUa— Ben Butler (@BenLButler) April 3, 2020
What a waste! #COVID19Pandemic is forcing Dairy farmers to dump their milk down the drain so the milk market doesn’t implode. Why not give it away to those who need it? We’ll get to the bottom of it at 6:00. pic.twitter.com/ZXp2uSjWQa— Shaun Gallagher (@ShaunGalNews) April 2, 2020
Heartbreak of dumping whole milk as the supply chain struggles. Photo via a Facebook friend pic.twitter.com/Q9j1dmkIyV— NYFarmer (@NYFarmer) April 2, 2020
Dairy farmers are dumping milk to curb an oversupply, as prices drop to lows that haven’t been seen in years pic.twitter.com/TkUSJEwRBD— QuickTake by Bloomberg (@QuickTake) April 7, 2020
With dairy supplies quickly increasing, the industry might have to cut production across farms to avoid oversupply conditions that would crush spot prices.
Nancy Mueller's Wisconsin dairy farm of 1,000 cows had to pour 6,000 gallons of milk into a manure pit last week as demand collapsed with area restaurants closed.
"It was heart-wrenching" to see all the destruction the pandemic has created, Mueller said.
Bob Wills, the founder of Milwaukee-based Clock Shadow Creamery, said with Milwaukee area restaurants closed, sales of his ricotta cheeses crashed 95%. He's stopped all production and laid off most of his staff to weather the economic downturn.
Howard Bohl, who milks 450 cows in east-central Wisconsin, has had to send 20 of his cows to the slaughterhouse and dump ten tanker loads, or about 60,000 gallons of milk into his manure pits as demand for his dairy products collapses.
Dairy Farmers of America said it would be providing aid to farmers who have dumped milk. Currently, a "milk crisis plan" is being formulated by the Department of Agriculture to save the industry from collapse. There's the possibility that excess dairy products could be rerouted to America's new breadlines that are exponentially growing.