Crisis forcing dairies to dump thousands of gallons of milk

OKEECHOBEE — The economic impact of COVID-19 is forcing dairy farms around Okeechobee to dump their own product down the drain — literally.


The closure of schools, theme parks and some restaurants has led to a dramatically smaller demand for milk products. That decreased demand has resulted in a situation where dairy farms have containers and tankers full of milk with no one to sell it to, which forced farmers into the unenviable position of having to watch their hard work go spilling out onto their fields and down the drain.


Initial estimates put the amount of milk dumped in Okeechobee County this week near 200,000 gallons.


“Right now the milk is being dumped onto spray fields so those nutrients will go back into grass to feed cows,” said Regional Dairy Extension Agent Colleen Larson, with the University of Florida’s Institute of Food and Agricultural Sciences (UF/IFAS) Extension Service. “But there’s a tremendous amount of work and effort that went into producing that product on already very small margins. All of that effort is now just being dumped onto the ground.”


Another factor to consider is that at the onset of the pandemic, many grocery stores put limitations on how much milk a customer could buy. There were good intentions behind those measures as it discouraged people from panic buying and hoarding. But with farms now having to throw away milk, perhaps the time has come to ease those restrictions and make it easier for farmers to put their product in consumer’s hands.


The timing of this crisis couldn’t have been worse for the dairy industry.
For the past four to five years farmers not only in Okeechobee but across the country have dealt with an oversupply problem and a tit-for-tat trade war that kept prices stagnant and put many farms out of business.


In August 2018 the industry received some relief from the federal government when the USDA announced it was planning to buy $50 million worth of U.S. milk and give it to food banks through The Emergency Food Assistance Program (TEFAP). Then in early 2020 the United States and China signed what was called the “Phase One trade agreement.” In the agreement China agreed to improve the regulatory pathway for the U.S. dairy industry to export things like milk and infant formula. China also made promises of increased purchases of U.S. agricultural goods, including dairy.


It looked like the industry was just starting to climb out of the valley it had been in since 2015. After years of losing money, farms started breaking even or becoming profitable again.


Then COVID-19 hit.
“From the end of 2015 to 2019 dairy farms were using every bit of equity they had, doing things to save money and cut costs,” Mrs. Larson explained. “They were just starting to make money now, and then this happened. A lot of them are in a very bad place right now. I would assume there will be more dairies that will go out of business if this continues and there is not a solution.”


Milk futures have absolutely plummeted in reaction to the pandemic. Currently, futures are projecting a $6 per hundredweight loss in the pay price from January to June.


“We have so many people, from consumers to friends and family, that ask how can they help and what can they do,” said Mrs. Larson. “And dairy farmers and others in the industry don’t really have an answer right now. It’s really kind of out of our hands. We can’t say come buy the milk from us because that’s not legal. We can’t sell it directly from the farm. The requirements for testing and processing to have a safe food supply are in place for a reason. But our hands are tied at this point. People are wanting to support an industry that they want to be here and we don’t even know what to tell them to do.”


Dairies were included in the COVID-19 economic relief package recently passed by Congress. The bill included around $9.5 billion for livestock producers and dairies, but the details on how that money will be distributed and rolled out have been scant.


Florida Agriculture Commissioner Nicole “Nikki” Fried and Florida Farm Bureau President John L. Hoblick held a town hall meeting on April 2 to discuss the unprecedented problems facing the agriculture industry in this crisis.


“Our team is working tirelessly to find solutions,” said Commissioner Fried in the beginning of the town hall. “My priority is preventing and mitigating losses for your crops. We’re coordinating with other Florida state departments, like the Department of Corrections, in need of fresh foods so they can purchase fresh from Florida. But in order for any of the state departments to purchase from our farmers, Florida producers and farmers must be registered on My Florida Marketplace. It’s really important if you’re not already registered to register. It is the only way our state dollars can go to purchase produce.”


“We’re also asking that the USDA purchase additional agricultural products through the more the $9 billion in the recently passed CARES Act,” continued Commissioner Fried. “We’re advocating for the quick release of federal relief funds for the ag community.”


Last year the U.S. Bureau of Economic Analysis (BEA) released data showing that Okeechobee’s GDP shrunk by 8% from 2017 to 2018. A big part of that drop was due to the agriculture industry. From 2017 to 2018 the industry in Okeechobee fell by 56 percent.


Dean Foods, the largest dairy producer in the U.S., filed for Chapter 11 bankruptcy in November 2019. Dean Foods bought the McArthur Dairy brand back in 1980 and still purchased milk from about a dozen independent dairy farms around Lake Okeechobee, including McArthur Farms.


Another large dairy producer declared bankruptcy in 2020, causing Okeechobee farms to take a hit shortly before the COVID-19 crisis hit in full force. Borden Dairy Co. announced it filed for Chapter 11 bankruptcy in January 2020 after more than 160 years in business. The bankruptcy resulted in Okeechobee farms that had sold milk to a Borden-owned plant not being paid for a large amount of product that had been used there.


That would be a bitter pill to swallow for any industry, but it was especially bitter considering what dairy farmers in Okeechobee have had to fight through to survive to this point. And makes the current situation all the more dire.


The dairy industry has been inexorably tied to Okeechobee’s economy for much of the county’s history. And now both will be searching for a path to overcome the economic paralysis brought on by COVID-19.

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