Dairy farmers have been forced to dump milk. Beef, pork and chicken plants have closed. What's going on?
Grocery store shoppers are being met with empty store shelves, not because there is a shortage of food, but because the nation’s food supply chain is struggling to cope with either stockpiling by consumers, or a slump in demand from restaurants, and illness among workers due to the COVID-19 pandemic.
With restaurants and schools closed, food-service demand has evaporated. Making the change from processing and packaging items for foodservice clients to preparing food for retail sales has proven to be a long and difficult process for food producers and manufacturers. Though the supply chains for retail and foodservice are similar, there are notable differences. For example, labeling is different between the two categories, and lots of items going through the foodservice supply chains is at a jumbo size that wouldn’t even be appropriate for warehouse sellers like Costco Wholesale Corp. COST, -1.83% or BJ’s Wholesale Club Holdings Inc. BJ, -2.44%
Dumping milk The order to dump milk comes from the buyer. For most Wisconsin producers, that’s usually a farmer-owned cooperative who will tell certain producers to dump but will “blend” the losses across its membership so that it’s a shared burden, explained Mark Stephenson, director of dairy policy analysis at the University of Wisconsin, Madison. Producers who sell directly to processors, however, could find themselves shut out and forced to eat the cost of the dumped milk on their own.
Fragile eggs Jesse Laflamme, chief executive of specialty egg producer Pete & Gerry’s Organic Eggs, says egg farmers are also facing uncertainty. Prices have soared then dropped in a matter of months. Farmers debate what to do next as the pricing “roller coaster” ride might not be over. “This supply chain wasn’t made to swell like this,” Laflamme said. “Now it’s all an impediment because food is so cheap in this country and our supply chain is fragile.”
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