milk supply

Dairy Supply Chains Will Need to Remain Flexible According to Report

Brian GermanDairy & Livestock, Industry

A new report from CoBank’s Knowledge Exchange indicates that dairy supply chains will need to make considerable adjustments to respond to the market created by the COVID-19 pandemic. The drastically lowered demand for dairy in the foodservice sector has caused a significant shift in the market. The shelter in place orders have drastically changed consumer behaviors, which CoBank expects to persist over the next 12 to 18 months.

Dairy Supply Chains

“The dairy industry is coping with some new realities, largely driven by the decrease in food service demand and restaurant sales,” Manager of CoBank’s Knowledge Exchange Tanner Ehmke said in a news release. “The challenge for dairy supply chains will be adapting to focus on meeting demand trends based on evolving consumer behavior as we navigate through an uneven reopening.”

The Dairy Supply Chains Adapt as Consumers React to COVID-19 report demonstrates that consumer purchase habits have been overhauled as most Americans are now spending significantly more time at home. The report reflected that processed cheese sales increased by 20 percent and white milk sales increase by more than 10 percent during an eight-week period ending May 31.

Grocery outlets have been reducing product selection in stores to improve operational efficiency and information from Nielsen indicates that grocers were carrying seven percent fewer dairy items than 2019 in the four weeks ending June 13. Perishability has been of critical importance in the market disruptions, with buyers seeking alternatives that offered extended shelf life.

The report concluded with an outlook of uncertainty within the market.  Consumer trends and the level of disposable income will be important factors governing the dairy market in the coming weeks and months. Dairy supply chains will need to remain flexible to adapt to shifts in the market as the COVID-19 pandemic continues to have an impact.  The entire report from CoBank is available online.

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Brian German

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Ag News Director, AgNet West