Woman buying milk.
March 24, 2020

COVID-19 Dairy Farm Losses Could Exceed $2.85 Billion

 |  By: Jim Dickrell

The National Milk Producers Federation (NMPF) estimates dairy farm losses due to the COVID-19 pandemic could top $2.8 billion, and additional help from the Federal government may be needed.

“Over the last five weeks, the [United States Department of Agriculture’s} estimate of 2020 milk prices reflect a drop of about $2.85 billion at the farm level,” Jim Mulhern, NMPF president and CEO, wrote to USDA Secretary Sonny Perdue.

“Further drops are possible as the impact of the COVID-19 outbreak spreads. The demand shock experienced by our entire economy is turning what initially looked to dairy farmers like the first decent year in the last five into one of potentially widespread economic devastation,” Mulhern says.

Note: Dairy industry analyst Matt Gould reports dairy product sales in grocery stores soared the week ending March 14, with fluid milk up 32%, cheese up 45% and yogurt up 29% over year-earlier sales. This is likely a reflection in the drop in restaurant sales, which are grinding to a halt in many states. Keep in mind, too, that school milk sales represent about 9% of fluid use during the school year, and many states are shuttering schools as well.

Mulhern expects sales challenges to mount in the next several months, as joblessness rises, schools remain closed and dairy processing operations face potential challenges. Consequently, he is calling on USDA to:

  1. Make additional dairy product purchases to help with high demand at food banks.
  2. Compensate for on-farm milk disposal, should they occur, due to the outbreak.
  3. Re-open sign-up for the Dairy Margin Coverage program. He notes DMC participation in 2020 declined in anticipation of higher prices.

As of March 9, just over 13,000 dairy farmers, or just 35% of U.S. licensed dairy farms, have signed up for DMC coverage in 2020. Last year, more than 23,000 dairy farmers had signed up for DMC coverage.