Panelist: Strong Fluid Milk Demand Will Trend to Value-Added Products
August 27, 2020
Milk prices were at some of their lowest points in a decade, this spring. Then the coronavirus arrived and made an already tough economic situation worse. Suddenly, food service businesses, schools and restaurants closed leaving many producers with no place to sell their milk.
“We had a big supply chain interruption in late March and early April, which caused a lot of milk to be dumped,” recalls Chris Noble, Noblehurst Farms.
The seven-generation, multi-family farm is based in upstate New York, near Linwood. It includes an 1,800-cow dairy and more than 2,500 acres of corn, alfalfa, wheat and triticale.
“We had to find channels to align that supply and demand, and we started donating a lot of milk to local communities,” Noble says.
In the months since the pandemic started, the family has worked hard to adjust and regain its footing. It helps that the family’s business ventures are diversified between the dairy; Noblehurst Green Energy, which produces electricity; Natural Upcycling, a food-scrap collection business; and Craigs Station Creamery, a milk processing facility.
“Fortunately, our grocery retail business went up. We saw sales increases of 15% to 20%,” he says, referencing business through Craigs Station Creamery, which is adjacent to Noblehurst Farms.
The Creamery involves eight area, family-run dairy farms. Fresh milk from the farms is brought daily to the 14,000-square-foot dairy processing facility, which is designed to cold-separate the milk into cream, skim milk and reduced-fat milk.
Much of the whole milk is turned into cheddar, muenster and Swiss cheeses. Some of the milk is also marketed in liquid form to customers throughout the region.
After the initial plummet in fluid milk sales, Noble and other dairymen watched as sales and prices began to rally and pick up steam.
“I think what we’re seeing now is the impact of people eating breakfast at home again. People are buying gallons of milk that they’re putting on breakfast cereal, and breakfast cereal sales are up, too,” Noble says. “We’re basking in the glory of the old days of fluid milk demand.”
Noble doesn’t expect to see strong fluid milk demand to continue long-term.
“I think over the long term, we're going to be shifting to value-added milk products,” he contends. “People will want products with an extended shelf life that they won’t have to throw into their fridge when they get home.”
In addition, Noble doesn’t believe all the channels that dairy producers sold to pre-COVID are going to come back the way they were prior to the pandemic.
“You know, some may get better and some may fall apart,” he notes. “Then, obviously, all the fixed manufacturing assets from the farm all the way up to the consumer will need to change to reflect that.
“Within that comes opportunity, as a farmer, to sell our product directly to consumers,” he adds. “Having that direct-to-consumer connection can provide another revenue stream.”
Noble shared his outlook on the dairy industry during a Farm Journal Field Days panel discussion, “The New Normal: Managing Consumer Preference and Environmental Concerns in a Post-COVID world.”