HILLTOWNS — While social media is circulating photos and videos of dairy farmers dumping milk, Hilltown dairy farmers Kenneth Saddlemire and David Lewis report that business seems to be going on as usual — but it doesn’t mean they’re not hurting.

This week, the cooperative to which both Lewis and Saddlemire sell their milk said there will be delays in checks for milk; a deduction will be added to cover COVID-19 costs; and the cooperative, starting in May, will pay full value for only 85 percent of their milk.

Reports have emerged across the country that, because of the closure of restaurants, schools, and other businesses and organizations that buy milk wholesale, some dairy farmers are being forced to dump their milk as demand in the “food-away-from-home” sector plummets, even as grocery stores are putting limits on gallons of milk and other dairy products to ensure that panic-purchasing doesn’t leave people without basic goods. 

When asked if he’s experiencing the same thing, Lewis said “Not so much. We haven’t had to dump any milk.” 

Lewis owns and operates Lewis Dale Farms in Medusa with his daughter, Rebecca. They have 45 cows — 30 heifers — and employ a milk truck driver and a grain truck driver, both of whom are still working, Lewis said.

Lewis Dale Farms is part of the national milk cooperative Dairy Farmers of America, which takes his milk and then markets and distributes it. 

Lewis expressed empathy for farmers who are being told to dump their milk by their cooperatives but said of his own milk, “So far, [Dairy Farmers of America] is taking it and handling it.” 

He doesn’t know where exactly the milk from his farm ends up, but said he thinks most of it ends up being used for retail products. 

Saddlemire, who owns Saddlemire Farms in Knox, is also a member of Dairy Farmers of America and said that most of his milk goes to Chobani, a yogurt producer in central New York, “but has been taken to cheese, ice cream, and fluid plants.”

Saddlemire said he has 45 cows milking and 76 cows in total, and produces “38,000 pounds [of milk] or 4,500 per month.”

“So far, no dumping or change in production,” he said.

Still, these otherwise unaffected members of Dairy Farmers of America will be forced to carry some of the burden of the economic downturn through new surcharges.

This week, Saddlemire told The Enterprise that he received two letters from the  cooperative stating that there will be delays in checks for milk; a new deduction will be put in place to cover COVID-19 costs, the amount of which was not disclosed; and that Dairy Farmers of America will pay full value for up to 85-percent of produced milk, but the remaining 15 percent will be bought at a heavy discount, a model that will take effect in May. 

The full value of milk, Saddlemire said, is $18 per hundredweight, a unit that essentially measures 100 pounds. That price will drop to $7 per hundredweight for 15-percent of production. 

“This is being enacted with no input from members and without warning,” Saddlemire said.

Saddlemire listed the various deductions already placed on his product, with some numbers rounded to the nearest penny by The Enterprise: 

— $0.15 per hundredweight for advertising and promotion;

— $0.20 per hundredweight for capital retain;

— $0.04 per hundredweight for CWT investment;

— $0.40 per hundredweight for marketing fees;

— $0.87 per hundredweight for hauling;

— $0.14 per hundredweight as a fuel surcharge;

— $10 per day as a stop charge; and

— an unknown amount for COVID-19

“These changes in dynamics and added costs are being paid by farmers,” Saddlemire said in an email. “No way this should be reflected in stores, but it will be twisted to make the Farmers look like they are the blame. We don’t set prices paid to us, handlers and processors do.”

Explaining that the turmoil is present across agriculture, Saddlemire, a Knox councilman, said that these changes are affecting farmers more than the virus itself. 

“Limited supply in store doesn’t seem justified,” Saddlemire said. “There is not a shortage at farm level; the downfall is in processing.”

“Farms have already spent money on producing a product, feeding animals, planting and fertilizing crops,” Saddlemire said. “They now face uncertainty of being able to sell or move products to [consumers]. Most will be lucky to cover the costs.”

Background

The Farm Bureau, a private, international organization that advocates for farmers, drew from United States Department of Agriculture data to conclude that 2019 saw the largest decline in the number of dairy farms since 2004. It pointed to high levels of supply and diminishing demand, which in turn drove down prices and made it difficult for smaller dairy farmers to sustain their operations.

New York State is the fourth most prominent dairy producer in the U.S. with 15.1 billion pounds produced in 2019, reflecting a 19-percent increase in 10 years, the Farm Bureau reported. 

This general decline prior to the pandemic may be attributed to an increase in money spent by Americans at restaurants and for other “food away from home” compared to “food at home,” or groceries, as reported by a USDA study in September 2018.

In 2010, the study says, the share of Americans’ food budget for food away from home — reaching 50 percent (up from 41 percent in 1984) — surpassed the share for food at home for the first time.

So, when the virus hit the United States and prompted the closure of schools, restaurants, hotels, and other places where people got their food, food producers were hit hard by returned orders and ceased deliveries.

The downshift could be temporary, though, as consumers turn to grocery stores because they find themselves spending more time at home and potentially with less money to spend on delivery options. 

At this point, however, Dairy Farmers of America is not seeing a sustained demand for dairy products at grocery stores, according to Kristen Coady, Vice President of Corporate Communications. 

Coady said in a statement that, while the Dairy Farmers of America “initially saw increased demand at grocery stores as consumers stocked up on many products, like dairy, in anticipation of shelter-in-place-orders, the retail demand has now dropped.”

Still, the same USDA study reported that, from 2006 through 2010, during the Great Recession, spending on food away from home declined by 18-percent and was compensated, at least in part, with retail purchases.

On March 19, Phil Plourd, president of Blimling and Associates — a research firm that deals with dairy markets — wrote a speculative blog post on the International Dairy Foods Association website that signaled some level of optimism for a rebound in dairy sales. 

“Consumers are flocking to grocery stores,” Plourd wrote, “generating a surge in demand for cheese, milk, butter, yogurt and foods with a lot of dairy ingredients such as frozen pizza

“Will we find a big air pocket in demand in two or three weeks?” Plourd asked, answering himself.  “Maybe. But keep in mind that people are going to eat. Yes, we’ve clearly seen hoarding at grocery stores. But it’s also possible that a good number of consumers don’t usually have much food in the house.

“Sure,” he wrote, “they may now have enough toilet paper and red kidney beans for months. But they will likely have to return much sooner than that for perishables, including dairy products.” 

Government relief — and more

Whether dairy farmers are in for a quick recovery or a long stretch of hardship, many are calling for governments to provide aid to dairy farmers and others to mitigate the impacts of the virus on the marketplace.

On April 15, New York State Assembly Minority Leader Will Barclay submitted a letter to Governor Andrew Cuomo; legislative leaders; and Richard Ball, the state’s commissioner of agriculture, asking for state-level initiatives like the suspension of the highway-use tax, the provision of vouchers to food banks to promote local agriculture purchases, and an extension of the Milk Producers Security Fund to help those who can’t sell their product.

The letter was signed by 41 legislators, including Republican Chris Tague, who represents the 102nd Assembly District.

Congressman Paul Tonko, a Democrat serving the state’s 20th District in Congress, signed a bipartisan letter to the U.S. Department of Agriculture Secretary Sonny Perdue asking, among other things, that dairy farmers be compensated for wasted product.

“Dairy farms are the backbone of rural economies across the country,” the letter reads. “ …. However, the dairy industry is now facing unprecedented and extensive economic damage due to the COVID-19 pandemic. The foodservice market has collapsed overnight due to closures of schools and restaurants, and export disruptions are harming milk powder demand. 

“The decrease in demand for finished products,” the letter goes on, “has caused processing plants to curtail or cease operations and cancel fluid milk orders. Farmers are being forced to dump milk and milk prices are plummeting. Dairy farmers have already seen losses of more than $5.7 billion due to this crisis.” 

But relief doesn’t rest solely in the hands of the government. 

Saddlemire had this advice for consumers: “Help by buying whole milk,” he said, adding that a code on each bottle indicates where it came from. “The number 36 is for New York State. Purchase fresh food versus frozen or processed,” he urged.