Farmers give away potatoes, dairy cows slaughtered for meat

Farmers give away potatoes, dairy cows slaughtered for meat

  • A massive pileup of potatoes seen in Washington warehouses
  • Farmers are forced to incur costs to wash, bag and ship potatoes - for giving away
  • Dairy cows being slaughtered amidst a glut of milk, and rising demand for cheap beef

The coronavirus pandemic has turned the U.S. food supply chain on its head. Meat, produce, or dairy is sitting in farms, becoming a huge overhead for farmers, even as shortages mount on supermarket shelves. As a result, beleaguered farmers are having to give away produce, euthanize livestock, or in the case of milk, simply draining it away.

According to a Reuters report, farmers in the potato producing state of Washington have so much potato on their hands that they are just giving it away in lots of 100,000 pounds. The irony: a lot of it is landing up in food banks catering to millions of people unemployed due to the virus outbreak.

The Washington State Potato Commission estimates that warehouses in the state are holding as much as a billion pounds of russet potatoes.

An estimated 90% of these potatoes would find their way to the foodservice industry. The latest jobs data shows that the leisure and hospitality industry, of which food service is a major sector, lost 7.7 million jobs, accounting for 47% of job losses in April. The foodservice industry has been laid low due to lockdowns and shelter-in-place restrictions from the battle against COVI-19.

“Everyone in Washington would have to eat about 500 pounds of potatoes from now until the 4th of July to clear out that pipeline,” Brandy Tucker, the commission’s director of marketing, told Reuters.

In dairy, too, farmers are simply giving away milk as they face huge destruction of demand from the commercial dairy market. Schools and businesses have downed shutters due to the virus’s fears. Meanwhile, the rise in demand for milk from people who are sheltering-in-place, through grocery stores, has not been enough to balance the loss from the commercial market.

As a result, farmers have a huge excess of milk on their hands.

According to David Darr, senior vice-president and chief strategy and sustainability officer with Dairy Farmers of America, dairy farmers are now looking to cut milk production by 5% to 15% due to the mismatch between supply and demand.

In another unexpected and tragic fallout for the dairy market, farmers are now also contemplating having to reduce their herds of milk-producing cows amidst the prevailing glut of milk. This is a vicious see-saw from the pre-COVID situation when dairy farmers were anticipating better milk prices and expanding herds.

Bloomberg reported that more and more farmers are being forced to send their dairy cows for slaughter into food for human consumption. This trend is also satisfying the demand for cheaper beef in the current economically difficult conditions amidst runaway unemployment.

“Lean ground beef, principally from dairy cows, has become the prime meat of the day,” said Dave Kurzawski, senior broker at INTL FCStone, to Bloomberg.

By Sundeep Goyal
Sundeep Goyal is an investor and trader in stocks, commodities and forex. He has professional accounting qualifications and extensive experience in the financial markets. Additionally, he keeps on top of developments in technology, alternative investments and renewable energy.

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