April 25, 2020

 

US' New Mexico dairy sector drowns in milk surplus

 

 

The dairy sector of New Mexico is working to find uses for excess milk, but the drop in demand is "an absolute nightmare situation," says Charlie DeGroot, a partner in Three Amigos Dairy, reported Taos News.

 

The COVID-19 pandemic is choking New Mexico's dairy market, forcing many farmers to throw surplus milk into irrigation ponds.

 

The statewide shutdown of schools and restaurants, which are large buyers of dairy products, have contributed to a steep drop in demand for milk. Facing a glut, dairy farmers are dumping mass quantities of their product just as a growing number of jobless people struggle to feed their families.

 

"It's an absolute nightmare situation," said Charlie DeGroot, a partner in Three Amigos Dairy in the town of Dexter, south of Roswell. "There's a lot of concern about the fact that we've got these food lines, food banks and all of that, and milk is being dumped."

 

DeGroot said he has not had to dump a load yet but knows farmers in Lovington, Las Cruces and other dairy-producing areas are tossing excess milk.

 

"No one wants to see it go to waste," said Beverly Idsinga, executive director of Dairy Producers of New Mexico. "For all that hard work to go to waste is heartbreaking."

 

Farmers are not literally throwing the milk onto the ground, Idsinga said. They put it into lagoons to help irrigate pastures or crops, or they feed the milk to calves, she said. Still, it's milk that is not being sold, which hurts dairies that are already losing money as milk prices plummet, she said.

 

New Mexico is the nation's ninth-largest dairy-producing state. About 140 dairies produce 8.3 billion pounds of milk, which inject US$1 billion into the state's economy, according to 2018 data. Those numbers are certain to fall this year.

 

In January, milk prices were forecast, based on futures, to be about US$18 per 100 pounds going into May, Idsinga said.

 

Then the pandemic hit. Prices are now about US$12—well below the US$15 that farmers need to break even, she said.

 

The average dairy in the state has 2,400 cows, so many of the farms are losing hundreds of thousands of dollars a month, DeGroot said.

 

The USDA has earmarked US$30 billion in relief money for the nation's dairies, he said.

 

The industry wants the money dispensed at a flat rate per 100 pounds of milk produced, DeGroot said. But federal officials have proposed putting a US$250,000 cap on what a dairy receives, which will barely compensate for the losses of larger operations.

 

The pandemic has slammed an industry that already was grappling with a milk surplus, DeGroot said. Demand for beverage milk has declined for 20 years as fewer people drink milk with dinner and pour milk on breakfast cereal, he said.

 

Most of the milk Americans consume is in products such as cheese, yoghurt and ice cream or additives in food, he said. Dairy companies now make less beverage milk, which, combined with shoppers' panic-buying, has led to empty milk racks in stores.

 

To reduce surplus, the Greater Southwest Agency, made of the region's two cooperatives, imposed a production limit on dairies.

 

New Mexico dairies now get full price only on 90% of their March volume, DeGroot said. For any milk they sell above that threshold, they'll only be paid about 10% of the current price.

 

Cutting production is tricky because you cannot simply stop milking cows or it hurts them, Idsinga said.

 

Cows' milk will dry up after about 30 days of lactation. That's when you can sideline some to produce less milk, DeGroot said.