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Coronavirus shutdown sends milk prices spiraling
Coronavirus causes economic hardship for dairy farmers.
Black Cat Dairy co-founder Jason Leedle discusses farmers dumping milk as the coronavirus shutdown hammers their restaurant-industry customers.
Milk prices are crashing as the COVID-19 pandemic chokes off most of the industry’s usual customers.
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Class III milk, used to make cheese and traded at CME Group, has plunged by 38 percent this year to $0.12 per pound, as “stay-at-home” orders have paralyzed the U.S. economy and crushed demand for dairy.
“With the closure of all the restaurants — hotels, cruise ships, airlines working at just a fraction of what they used to — school milk, school lunch programs, all of that dairy demand is gone,” Joe Schmit, dairy risk manager at Rice Dairy, a Chicago-based dairy risk-management solutions provider, told FOX Business.
CORONAVIRUS FORCES DAIRY FARMERS TO DUMP MILK MEANT FOR RESTAURANTS
“You just can't replace that demand with retail grocery store sales alone,” he added. “So that's left us with a little bit of a glut, and sadly there's nowhere for our processors to go with that milk other than to just dump it out.”
Total U.S. dairy demand has fallen by 12 percent to 15 percent since the COVID-19 outbreak, according to the Dairy Farmers of America.
About half of total demand comes via grocery store sales and the other half is derived from the food-services industry, which includes restaurants, hotels and airlines.