Mainebiz

V O L . X X V I N O. X V J U LY 1 3 , 2 0 2 0 16 A U G U S TA / WAT E R V I L L E / C E N T R A L M A I N E F O C U S Instead, the pandemic's shelter- in-place orders dried up demand for milk, cheese, butter, sour cream and other products from large buyers such as colleges, school systems and restaurants. Although many schools still delivered food to students, there is still less milk being consumed within school districts, notes Taylor. Milk consumption in the home increased as people moved to remote work and home-prepared meals, but demand for products like cheese and butter melted away, resulting in a decline in prices paid to dairy farmers. International trade of dairy products also slumped. As of mid-June, says Taylor, prices were at $11.50 per hundredweight, well below the pre-pandemic's $18. "It got pretty scary for a while," says Bickford. Pare production In response to the uncertain market, the regional cooperatives that man- age most Maine dairy farms required them to reduce production. Taylor's coop, Andover, Mass.-based Agri-Mark Inc., required a 4% reduction from May through June, and 2% for July. "It doesn't sound like much but, when you add it up, it's a lot of milk," says Doug DiMento, director of corpo- rate communications for Agri-Mark (commonly known as Cabot Creamery Cooperative), which includes about 90 Maine farms and 800 overall through- out New England and New York. "It's not good news for the dairy farmers because they need to keep their cash flow going. On the other hand, we can't market milk there's no home for." Food service is 40% of Agri-Mark's business, says DiMento. One of the co- op's functions is to guarantee prices and markets. e pandemic wrought havoc. "ere's been a lot of turmoil," he continues. "We're trying to work through it now. We expect food service will come back a little bit. But how much? How many restaurants and hotels will open in Maine?" Options to pare production — at a time of year when cows naturally go full bore — included drying off and culling cows, says Taylor. Drying off still incurs the expense of care with no corresponding income, but allows the farm to return to normal production when it's allowed. Taylor's nutrition- ist is also developing a feed ration that doesn't focus solely on pounds of milk, but rather on pounds of fat and protein to develop a premium product earning a higher price. Culling mostly consists of convert- ing to beef cattle. "All dairy farmers also produce for the beef market," Bickford wrote in a June market report. "During this COVID-19 era, being able to slaughter and package dairy cows and bulls for beef has not only provided additional outlets for Maine people to secure food, but has served as another income stream for Maine dairy farms." Taylor's farm sold around 30 cows over three or four weeks to try to reduce production. "Beef prices had come up a bit so the additional beef sales did help some, but not enough to offset the lower milk prices," he says. Either way, less milk shipped meant lower revenues during what's usually the most expensive time of year. "March, April and May are three of the most cash-intensive months for dairy farms, because they're getting ready to plant their crops," says Bickford. "Most farmers grow the feed they give to their cattle. ey have to make their purchases of feed and fertilizer, and they start repairing their equipment in those months. ere just wasn't a lot of money, so it was very unsettling for farmers." Prices rising again By late June, as the economy reopened, prices started to head up again. "e milk prices are not as low as the futures were suggesting back in April, which is good," says Taylor. "Also, the co-op is reducing the required reduction for the month of July, which I believe is another good sign. I believe this is mostly because people are buying more dairy in the grocery stores than what was originally thought." Still, it's not clear whether they'll reach the level originally expected for 2020. And, Bickford adds, "things could just as easily plummet again if other states start re-implementing restrictions in response to rising COVID cases." e state's stabilization program covers some of the industry's losses, she says, but falls short in the current pricing environment. Production cuts imposed by co-ops is expected to deprive Maine dairy farmers of almost $5.5 million per month. And the industry already operates on razor-thin margins, she says. Of the 212 farms open before the pan- demic, seven have gone out of business. » C O N T I N U E D F RO M P R E V I O U S PA G E John Bennett, president of Oakhurst Dairy in Portland, is seeing the market stabilize — but not to pre- pandemic levels. It got pretty scary for a while. — Julie-Marie Bickford Maine Dairy Industry Association [W]e can't market milk there's no home for. — Doug DiMento Agri-Mark Inc. P H O T O / T I M G R E E N WAY

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