Wisconsin Ag Connection - Dairy Experts Don't See Pandemic Woes as 'Long-Term'

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Dairy Experts Don't See Pandemic Woes as 'Long-Term'
Wisconsin Ag Connection - 04/10/2020

The Professional Dairy Producers of Wisconsin welcomed two more dairy marketing experts to its Dairy Signal webcast on Thursday who both painted a more optimistic picture about the times we live in. Ag Economist Dan Basse of AgResource Company says he estimates that the value of Class III milk has dropped nearly $4.00 per hundred since the COVID-19 pandemic began. But he said the day will come where the world gets back to more stable times.

"While it's true that this couldn't have happened at a worse time... because we tend to eat out more once the weather gets warmer, the year 2019 was the first year ever that Americans spent more money eating out than at the family table," Basse said, referring to the fact that more of Wisconsin dairy products are sold to the food service industry than in the grocery store."

He feels that once a vaccine comes on to the market, more people will feel comfortable going back to restaurants, theaters and social gatherings.

On a personal level, Basse said he has made adjustments to his own family's dairy farm by focusing more on efficiency rather than maximum production.

"We are all in survival mode right now," he said. "I believe as managers we must adjust by not looking as much at the total price, but focusing more on the margin between income and expenses in an effort to get through this."

Basse says if there's any silver lining about the situation, it's that farmers are able to save money on fuel and feed costs--both of which have fallen substantially as a result of the pandemic.

Jay Joy of Milk Money LLC added that business owners need to keep the effects of the pandemic in perspective.

"We can't lose sight of the fact that the food service industry will eventually recover," Joy stated. "Even though it's tough now, let's try not to make life changing decision in this period of uncertainty and volatility."

Despite the milk futures markets being down for the next six months, he reported that fall prices are already looking much better. He also feels structural changes will need to made to the industry once life returns to normal.

"Dairy is built in a way that's geared toward servicing the food service industry [on the wholesale level]. But in the future we need to have the ability to shift that capacity from food service to retail in a much more efficient manner than we can today."

PDPW's Shelly Mayer also lifted the spirits of the audience by reminiscing about her time alone outside this week looking at the Super Moon in the sky.

"It came to me looking at the moon and its bright light that it was ironic that during more of our most challenging and darkest moments, we're always provided with enough light for the next step," Mayer said. "And when we wake up in the early morning and wait for dawn, that moon is still there for us."

This week's Dairy Signal programs have been archived on PDPW's website and are free of charge for anyone to access. More live sessions will continue next Tuesday, Wednesday and Thursday to provide insight from the industry's top experts.

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