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U.S. farmers and food companies are decreasing production as the coronavirus lockdown disrupts the agriculture supply chain and demands from restaurants and schools has dwindled, the Wall Street Journal reports.
Why it matters: COVID-19 is further straining an already-stressed industry as farmers have watched nearby dairies shut down following declines in milk consumption, low prices and trade disputes, the WSJ writes. As producers are stuck with product they can't sell, the industry's reaction to the virus outbreak could impact prices for months to come.
The state of play: Production cutbacks have emerged even as demand from grocery stores has skyrocketed. Farmers can't easily repurpose products meant for restaurants and schools because they require different packaging and labels.
- Producers have 10% more milk than can be used, and because the product is perishable, they have no choice but to toss it — to the tune of roughly 7% of all milk produced in the last week, the WSJ reports.
- National milk marketing cooperative Dairy Farmers of America says it will continue to pay its members for dumped milk, however checks will be trimmed.
- Earlier this week, two dairy industry groups sent a “milk crisis plan” to the U.S. Department of Agriculture, asking for supportive measures such as paying farms that cut production and purchasing dairy for use in the nation’s feeding programs.
- Meanwhile, chicken companies are condensing their flocks to curb supply and throwing out chicken-hatching eggs.
- Pork bellies are also being rendered into lard, rather than bacon.
The bottom line: “When you have panic in the marketplace, weird things happen,” Tanner Ehmke, who researches agricultural markets for farm lender CoBank, told the WSJ.
Go deeper: Farmworkers risk coronavirus to keep supermarkets stocked with fresh food