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Dairy Farmers Reacting To Market Uncertainty

Nov 19, 2020
Posted by: Stearns Bank

Dairy farmers have had to continue to revise their budget projections for 2020 and beyond due to the pandemic.

Consumer spending habits have bounced around based on government restrictions and social distancing. Accordingly, the price of milk has been far from stable.

Brittney Muenster is the co-owner of Muenster’s Olde Homestead Farms and Registered Holsteins in Seymour, Wisconsin. She and her family, at one time, had 300 cattle for their dairy farm operation. That number has dropped to 100 as they have begun to focus more on raising cattle for beef.

“There has been a lot of volatility in the market (in 2020),” said Muenster, who also works part-time at a local insurance agency. “It’s been tough from a cash flow standpoint. Consumers have changed the way they purchase because of the pandemic. We don’t know where our volume is going because people aren’t going to restaurants as much and are buying more sporadically.”

That sporadic spending caused disruptions in March and April when the pandemic first hit the United States. Dairy farmers were forced to repackage many items and normal milk processing was interrupted.

“The price dropped in March and April and we felt that right away,” Muenster said. “The milk price recovered pretty quickly, but it’s still been tough, especially coming off 2019 where we had a tough year due to weather. The excess of rain we had here in Wisconsin put a financial burden on a lot of us.”

The Muensters, along with other U.S. farmers, received financial assistance from federal farm programs, but the lower feed quality from 2019 had a big impact on their herd’s production.

Increased Workload

Despite these challenges and setbacks, the Muensters have been able to manage their operation for steady performance. As a smaller dairy farm, they don’t have to rely on employees for help. They have taken on most of the work themselves, with Brittney assuming a larger role.

But due to COVID state restrictions, restaurants have opened back up and closed again, along with schools. That pattern has been hard on everyone in the dairy industry. Challenges remain.

“There are no real answers as to why the price is where it is,” Muenster said. “The last few years, we’ve had such low prices. At this point, it doesn’t make sense. We’re just concerned with how long the roller coaster is going to last.”

Mark Stephensen, director of dairy policy analysis at the University of Wisconsin-Madison, recently said that the average milk price could still be higher than in previous years. Government aid and price supports are helping farmers get by.

Cash flow is the difficult thing,” Stephenson told Spectrum 1 News. “You really kind of have to look at over the course of a year am I getting on average a big enough milk price to cover on average the cost that I have to produce that milk.”

Buying Local

Farmers benefit when consumers buy dairy products from local businesses (creameries, meat shops, cheese shops) rather than national chain stores, Muenster said.

“It’s always important to dairy farmers that you buy local,” she said. “Those dollars will go back to your own community versus buying from a chain. The fewer people in between the flow of money means dairy farmers will make more money off their product.”

In northeastern Wisconsin where the Muenster farm is located, COVID-19 outbreaks have depleted the labor force for local farmers. Despite the stress, the Muensters cope with bad news as best they can.

“We have gotten used to being proactive and trying to stay ahead of the negative news,” Muenster said. “Honestly, it feels less stressful than relying on other people. You can get things done yourself. Sometimes you have to go backward in order to go forward.”

Muenster and her family are remaining optimistic. For one, the 2020 harvest has been productive.

“We’re doing less chopping and more combining this year and that’s helped,” she said. “It feels less stressful doing it yourself. We can make the decisions ourselves. I value the time I have on the farm, with my family. I definitely feel more fulfilled being back out here more." 

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