'We're in dire need': Food service shutdown slams dairy farmers, producers

Yahoo Finance’s Alexis Christoforous, Brian Sozzi and Jess Smith discuss how the coronavirus has impacted dairy farmers and what problems they are encountering now.

Video transcript

ALEXIS CHRISTOFOROUS: This coronavirus has also been devastating for many of our farmers in this country-- dairy farmers in particular. Here for that story is Jessica Smith. And Jess, what have you found about our dairy farmers?

JESSICA SMITH: Yeah. I talked to some dairy farmers. I talked to the CEO of a co-op creamery and the CEO of the Wisconsin Cheesemakers Association, and the coronavirus has really hit all of them hard. And that's because so much of their business is restaurants and schools and the food service industry, and that has essentially shut down. So now, they have nowhere to send their product.

Millions and millions of pounds of cheese are just sitting in warehouses at this point that are filling up. It's going to waste. And farmers, dairy farmers, are dumping a lot of their milk that they can't sell at this point. I talked to one farmer in Wisconsin who told me they usually produce 30,000 gallons of milk every day, and now they're having to dispose between 12,000 and 15,000 pounds every day. So they said it's just devastating to watch your life work go to waste.

And now Wisconsin lawmakers and the industry are asking the USDA to step in. They want the USDA to step in and buy some of these products to give to food banks around the country. The way they see it, it would be a win-win. It would keep farmers in business, it would keep these plants running, and it would give food to people in need. The USDA told me it's monitoring the situation and it's looking at the authorities that it was given in the CARES Act and trying to figure out how it can help the situation, leverage its authority as needed throughout this process. So we'll keep an eye on what the USDA decides to do.

BRAIN SOZZI: Jess, can't the farmers just make that shift and get these products to grocery stores?

JESSICA SMITH: You know, that's actually the most frustrating part for a lot of these farmers. They tell me that it's just impossible to shift your supply chain on such short notice. They're telling you that there are essentially two supply chains-- one for food service and then one for retail. And everything is different. You have different packaging. You have different distribution companies. You have different recipes. And you just can't make that switch overnight.

So that's why they're hoping the USDA comes in and buys some of these products that maybe will work for food banks but wouldn't work for your grocery store. But yeah, one of the farmers said a grocery store 10 miles down the road is limiting how much milk people can buy. And it's just devastating, because they dump 12,000 gallons a day, to see the grocery store limiting how much people can buy, but there's just nothing they can do about it right away.

ALEXIS CHRISTOFOROUS: All right. Jessica Smith, thanks so much for that update on the country's farmers. We appreciate it.