We must respond to challenges to the food industry supply chain

By Sens. Dan Lauwers, Kevin Daley, Ed McBroom and Roger Victory

There is a devastating consequence of the COVID-19 pandemic beyond the lives and jobs lost to the disease: the effect it is having on the agriculture industry and the food industry supply chain.

As farmers and members of the Senate Republican Agriculture Caucus, we write to bring attention to this serious problem surrounding the pandemic and some steps that can be taken to counter it.

The entire food industry is and always should be just-in-time by nature. Food is perishable, and everyone appreciates fresh food. Even food that is preserved by freezing or canning is moved very quickly to ensure maximum value in freshness and nutrition.

For meat and dairy, this just-in-time system not only ensures our butter, milk, cheese and meat are fresh, it is also a function of how cows are milked every day, 365 days a year, and new animals are born as mature cows, pigs and chickens are processed into the steaks, chops and wings we love so much.

Farmers cannot hit a pause button. If cows aren’t milked each day, two to three times, they become sick. Animals headed to the butcher cannot simply stay in the feedlot or on the farm because their new siblings are waiting to take their place.

Why does all this matter? Because while the average consumer often only considers the retail milk on the shelves at the grocery store, the dairy industry relies greatly on bulk orders from restaurants, schools and the food service industry. The direct impact of the COVID-19 closure of those consumer outlets has resulted in a surplus supply at the dairy level that cannot be absorbed into other areas of distribution.

The situation is similar for the meat industry. As in other agricultural sectors, both the meat and dairy industries rely heavily on bulk orders from the food service industry. Unfortunately, due to the effect of the virus on that industry, it has dramatically reduced its demand for 50-pound boxes of meat and five-gallon bags or five-pound blocks of cheese from dairies.

Customers have shifted from the food service industry to individual purchasing too rapidly for the supply chain to follow. Restaurant packaging and needs do not readily match grocery store needs. Milk plants cannot quickly convert from individually wrapped butter chips to quarter-pound butter sticks.

Current challenges in the meat industry supply chain include processing plants forced to close; plants unable to accept all the animals they have contracted to receive; cow-calf productions with nowhere to sell their calves as feed lots reach capacity; producers at all levels receiving less per animal while prices on the store shelf increase due to increased demand. Meat prices to farmers have dropped in half, and milk is down 25% from when the stay-home orders were issued.

The supply chain for the dairy sector is even more complicated than that for the meat sector.

Milk is not a direct-to-consumer product. Dairies produce raw milk, which is then processed into a variety of dairy products. Dairy processors cannot easily transition between types of finished products. At both the processor and finished destination, there are limited storage capabilities for products that are often perishable and require refrigeration.

These are just some of the problems facing this complex supply chain, and they have resulted in an imbalance between the milk supply and demand in segments of the dairy industry. This perfect storm creates a surplus of milk at the dairy, even though retail consumer demand remains. Grocery store milk prices remain high but the price for milk at the farm has greatly fallen with the reduction in demand for food service milk products.

The challenges facing the industry are enormous.

What can you as a consumer do to help? You can buy meat at the store and continue to buy milk. Order curbside takeout from a favorite restaurant. These actions will keep the supply chain moving.

What can state government do to help? It should ensure personal protective equipment and rapid testing for processing plant employees are available to ensure healthy employees can return to work and keep the plants open.

Gov. Whitmer should be challenging and encouraging and helping businesses and employees to be working now to devise and implement safe work practices and safe personal behaviors to avoid the food shortages that will follow if quick action is not taken.

The governor needs to hear from her constituents. We encourage Michiganders to contact the governor’s office and voice their concerns. Gov. Whitmer’s constituent services line can be reached at 517-335-7858.