Demand has dropped for Jeff King’s goods this spring — but he can’t slow down production.
“Cows just don’t automatically decide to produce 10 percent less, just because we don’t need it,” said King, co-owner of King Brothers Dairy in Schuylerville. “They’re going to continue to produce the same amount today as they did yesterday. We’re dealing with animals, not a factory. We can’t just turn the dial back on the factory.”
Dairies are among businesses struggling as the nation copes with the COVID-19 pandemic. Milk production has remained the same, but traditional customers such as schools and restaurants are no longer buying because their doors are no longer open.
Local dairy farmers say they are feeling the financial pinch.
Help from government is coming. The Senate recently passed the $2 trillion coronavirus response bill, the CARES Act. In addition to the $560 billion earmarked for individuals, the bill includes $377 billion for small businesses and $9.5 billion for the U.S. Department of Agriculture.
Right now, King is chiefly concerned with the 1,000 cows at Kings-Ransom Farm.
“In a lot of ways, it’s business as usual, just like every day,” he said of farm days during the crisis. “Cows still need to be fed, they still need to be milked. We’re not in a situation where we can work from home, our staff is still coming to work on a daily basis and getting all the important work done.
“We’re looking at some challenging times with milk pricing,” King added. “We’re looking at prices taking a considerable drop.”
There has also been a considerable drop in business.
“We sell milk to restaurants and schools and we’ve seen that demand dry up almost 100 percent,” King said. “We also do some business with grocery stores and we do some home delivery business. We also have a store right on the farm.
“We’ve seen more interest in the home delivery business, we’ve seen more traffic through our on-farm store,” King added. “So it’s been down in some areas, up in other areas.”
The price prognosis is a chief concern.
“We as an industry, because we’ve had such reduced demand in certain segments of the market place, the industry just can’t turn and start making different products at the snap of a finger,” King said. “It really has created an excess of supply. What that’s going to do, it’s caused milk to have to be discarded just because there’s no home for it at the current time. It’s going to reduce the price that dairy farmers get significantly by 10 to 30 percent.”
Charles Hanehan, whose Hanehan Family Dairy is located in Saratoga Springs, said he generally does not believe in government handouts. “But this is a dire situation,” he said.
“It’s really a disaster right now,” he said of the dairy trade. “The futures have dropped dramatically, like 30 percent in the last month and a half. There’s milk dumping going on across the country because of the shutdown.”
Hanehan said he has been able to use milk produced by his 700 cows.
“We make Cabot cheese,” he said. “We’re making cheese as fast as we can possibly make it. All our lines are up and at capacity and cheese is flying off the shelves.”
Hanehan said sales of fluid milk, a big seller during supermarket shopping rushes of mid-March, have stalled. “That just shut right off,” he said.
Capital Region residents supporting restaurants and small businesses during the crisis, Hanehan said, can also help dairy farmers. “Don’t consume that nut juice they call milk,” he said, in a reference to almond milk. “I understand some people are going back to dairy, that’s great.”
U.S. Rep. Antonio Delgado (D-Rhinebeck) has been supporting the farm community.
Delgado last Thursday conducted a town hall-style conference call with several local officials and took questions from residents of his 19th Congressional District.
One caller asked Delgado if there was some way to connect farmers who are dumping agricultural products because of lack of demand with hungry people in need of food.
Delgado, in a story printed in The Daily Gazette, said he’s advocated for a disaster declaration that might enable farmers to donate food directly into emergency efforts to help feed the poor, but the erosion of the dairy market infrastructure hinders the potential for doing that.
“In the case of milk, it’s not always an option to bring their product to market; if a processor closes, you know, dairy can’t get their product to the market,” he said. “That’s the reality that I’m hearing across the district, particularly when it comes to milk dumping, which is ongoing.”
Delgado discussed some of the details of the relief programs available through the CARES Act. Among them was one he authored, Small Business Repayment Relief Act, which includes $17 billion in relief to automatically cover six months of loan payments, including principle, interest and fees, on current and new qualified Small Business Administration (SBA) loans.
“If you have an existing SBA loan, or a new one that you’re entering into, the payment on that loan for the next six months can be waived, not deferred, waived,” he said.
Another major provision in the CARES Act is the $350 billion available as part of the Paycheck Protection Program, which offers up to $10 million in loans for small businesses and nonprofits with up to 500 employees to help cover payroll and other costs over a period of up to eight weeks, with the loans being forgiven if the business retains employees at their salary levels.
The New York Farm Bureau is urging that funding the USDA receives from CARES be used for direct payments to farms.
Bureau President David Fisher, in a letter to U.S. Secretary of Agriculture Sonny Perdue, said “While no one could have predicted the extent of this virus on the country or its food supply, the impacts have been real and unprecedented for America’s farmers, including those in New York.
“Not only have farmers experienced the loss of markets, dumping of products and labor disruptions,” Fisher also wrote, “also there remains uncertainty of when they may see any type of recovery.”
In addition to direct payments, the bureau also has requested:
* The USDA immediately make purchases of dairy products, including fluid milk, butter, cheeses and dry milk powders.
* The creation of a voucher program for people in need through the Milk Donation Program (authorized under the 2018 Farm Bill) to facilitate the distribution of donated milk through grocery stores and other venues since some food banks and food pantries often do not have enough cold storage to accept large quantities of the perishable products.
* Provisions made for livestock, equine, horticulture, craft distilleries, maple producers and others facing closures and a significant loss of business.
On the state level, legislators are talking about a stimulus package specially targeted for agriculture — reimbursing farmers for any lost product related to the COVID-19 crisis.
Assemblyman Christopher Tague (R-Schoharie) says measures designed to stop the spread of coronavirus have led to disruptions in the food service industry — and those disruptions have led to drastic reductions for milk and dairy products.
“Although dairy farmers right at the moment are the ones being hit the hardest, this is going to be a domino effect on everybody in the agricultural industry,” Tague said. “When I was a dairy farmer, right about April 1 was the time I’d start to put the plow in the ground.
“I don’t know if any farmers are out there putting plows in the ground right now, but this is the time of year where they order fertilizer, their seeds, fuel, all the things to get ready to plant their crops for the year,” Tague added.
“With everything in limbo,” Tague also said, “it’s got to be making an awful tough decision on these folks, how much planting they’re going to do, how much money they’re going to spend. It’s just a very, very tough time.”
Tague has called on all branches of government to pass a “No Farms No Food” package to help farmers.
“Here’s the problem,” he said. “If we don’t figure something out, not only are we in trouble during this crisis, but after this crisis, this will knock the market price down. Most of these farmers were struggling before the crisis came about. We need to protect what’s going on right now, we have to protect the future, when things get back to normal.”
Tague added that once people receive permission to resume work, some will remain hesitant to go out in public. They may not want to get close to other people, they might stay away from restaurants and stores.
“We need to prepare and be ready for the future as well,” Tague said.
Jim Skiff, who has 200 cows on his Johnstown dairy farm, has not had to dump any milk — but his processor has been unable to pay him for past deliveries. He recently had to lay off two employees from a 20-person operation; his delivery business has been drastically reduced.
“I’ve lost over 80 percent of my business in the delivery part,” Skiff said. “The Fulton County BOCES, I’ve lost them all — Broadalbin, Perth, Johnstown, Gloversville, Fort Plain. I know I’m in real trouble right now. I don’t foresee the schools going back this year.”
Pricing, Skiff believes, was a problem in the dairy industry even before coronavirus hit the nation.
“It’s impossible to continue to produce the products that we do for the prices that we get, it’s just impossible,” Skiff said. “I don’t know how old the average farmer, is but there’s no one going into at all. Every year they’re losing farmers at a critical rate.”
Skiff said people who have stood in line at a grocery store during the crisis could face another scenario — one where food itself becomes scarce.
“What if you’re standing in line for a tractor-trailer of food to come to the grocery store?” he asked.
Skiff said dairy farmers have been through hard times before.
“We’ve had weather-related problems that are difficult to get through, we’ve had depressed commodity prices that we’ve got through,” he said. “As long as I get my accounts receivable soon, I’ll just be OK in the dairy industry. I haven’t been paid in a while.”
Like other farmers, David Gaige said life on his Knox dairy farm is business as usual.
“We haven’t had to dump any milk,” he said. “That might come.”
Gaige milk is still heading to the Chobani yogurt processing plant in New Berlin, Chenango County. But he said milk is mostly not moving.
“It’s definitely going to have a financial impact on farms, not just the farms but anyone in agriculture,” Gaige said of a market affected by coronavirus.
“We’ve been in farming and agriculture all our life, but anybody in agriculture the past five years or so, it hasn’t been real great.”
With 130 cows, Gaige said his farm is a family operation with no extra workers on the payroll. He is optimistic his farm, other farms and the local dairy industry will survive the health crisis.
“I’m sure everyone is going to come through this pretty much,” he said. “Maybe it’s a great lesson for our country, for everyone involved.”
Contact Gazette reporter Jeff Wilkin at 518-641-8400 or at [email protected]