Dairy farmers are dumping milk as demand declines due to COVID-19

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Many Canadian dairy farmers are being asked to dump raw milk amid the COVID-19 outbreak that has led to a decline in overall demand for key dairy products.

While grocery stores have seen sales of dairy products soar as consumers engaged in panic-buying, the widespread closure of restaurants, coffee shops and cafeterias across Canada has seen dairy demand plummet in recent weeks. The supply chain is adjusting to the shift in demand from wholesale to retail, but those changes are challenging and can take time.

As it grapples with the demand fluctuations, the Dairy Farmers of Canada said it has asked farmers to dispose of raw milk products.

“The dramatic changes in demand and the related challenges being felt throughout the supply chain have resulted in the need for the disposal of some raw milk, which is extremely unfortunate and difficult,” Dairy Farmers of Canada said in a statement.

“The last thing anyone wants to see is their milk being discarded, least of all farmers and their partners in the value chain.”

The Dairy Farmers of Canada said that farmers and processors are donating “significant volumes” of products to food banks, but the dearth in demand still means many farmers will have to dump their unspoiled raw milk.

Cheryl Smith, the chief executive officer of the Dairy Farmers of Ontario, said in a statement to Yahoo Finance Canada that the move to force farmers to dump milk is “an extraordinary measure and one that Dairy Farmers of Ontario has only ever considered in emergency situations.”

“We are working very closely with processors and industry groups to respond to the unpredictable market fluctuations that are now part of our current environment,” Smith said.

“The steps we take now are vitally important to the continued strength of our food supply chain and we are proceeding with that important goal in mind.”

Farmers will be asked to dump milk on a rotating basis, and will be compensated, but at a significantly lower rate than if that product was sold to market.

The Retail Council of Canada (RCC), which represents the country’s major grocery retailers including Loblaw, Metro and Sobeys, is working with producers and processors to ensure the supply chain keeps up with demand while minimizing food waste, said Jason McLinton, vice president of the RCC’s grocer division.

“A lot of the processors are picking up a lot of the fluid milk that would have otherwise seen sold to restaurants and schools and processing that into products with a longer shelf life, such as yogurt,” McLinton said.

“Our individual members are also working with suppliers to make sure as consumer demand remains really strong that they are getting that product and able to offer it to consumers.”

Canada’s dairy industry operates under a supply management system that limits the amount of dairy produced while controlling the price farmers receive. It also limits foreign imports of dairy products through the use of tariffs.

The dumping of dairy has not been restricted to Canada. Farmers in Wisconsin also began pouring milk down the drain last week as the coronavirus dried up the marketplace for dairy products.

Sylvain Charlebois, a professor of food policy at Dalhousie University, said that while the current situation due to COVID-19 is exceptional, Canada’s dairy supply management system means there is little incentive for farmers to invest in technology to avoid situations where milk has to be dumped.

“As soon as you store milk, you’re going to actually have to decrease the prices farmers get per litre,” Charlebois said.

With files from the Associated Press

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