2020’s COVID-19 pandemic has caused huge disruptions to the dairy industry from farm to truck to destination.
Mass closures of restaurants and schools forced an immediate shift from wholesale food-service markets to retail grocery stores, creating logistical and packaging nightmares for plants processing milk, butter and cheese. Distributors across the country struggled to adjust to changes in their supply — and many truck drivers stopped working altogether, afraid of COVID-19 exposure. So how has COVID-19 disrupted big dairy?
Milk No More
It started with milk dumping in April and May. Both Canada and the USA had an overflow of product as the food service industry was severely impacted, and in some regions completely shut down. The phenomenon of dumping milk is not unique to Canada as up to 7% of all milk produced in the United States was dumped in the first week of April. In the US, the largest buyer of fluid milk is the National School Lunch Program. Considering schools have been closed for 6 months, the demand literally dried up.
The Switch to Retail
Another huge challenge over the last six months was the switch from food service industry to retail. “About half of U.S. consumers’ food budget was spent on restaurants, and we’ve shut that spigot off,” said Matt Gould, editor at trade publication Dairy & Food Market Analyst. Suppliers struggle to make the shift from wholesale packaging for restaurants to preparing retail products for stores.
Labour Shortages
This summer, labour shortages were the next challenge. Each year over 60,000 temporary, seasonal workers migrate to Canada for employment. Most of them work with agriculture, but it’s those crops that feed livestock. With closed borders, most of those individuals were unable to return to the jobs they’ve worked year after year.
How Canadian Dairy is Making a Comeback
But it isn’t all bad news. A lot of dairy products that were on a downturn prior to the pandemic have reversed.
People are eating cereal again. Bowls don’t travel well, but since so many people are now at home — people are eating cereal again — and with cereal goes milk.
Carriers of dairy such as frozen pizza, coffee and bread are also seeing strong growth, helping to fuel additional dairy sales. Frozen pizza in particular experienced a sales boom as consumers sought convenient, affordable meal solutions.
Back in May, the Canadian Government stepped in back in to provide support which directly impacted Canadian Dairy Farmers.
What’s Next?
There have been some clear and significant disruptions to the dairy chain in Canada, directly related to COVID-19. Canada has adapted much quicker than the USA, which indicates we may recover faster.