Farmers Are Dumping Milk, Even as People Go Hungry. Here’s Why

Owyhee pivoted to grocery distribution more quickly than smaller operations, but it has still taken a hit. The smaller bagging machine packs only 10,000 onions an hour, slower than the bulk version. If Myers wanted to increase the pace by bringing in a new machine, he’d have to wait six to nine months for the specialty equipment to arrive from Europe.

Some products don’t sell well outside of a restaurant. Tomatoes make their way into ketchup, soup, and pizza sauce eaten outside the home. Chicken wing prices have dipped, as the marquee product of March Madness missed its star turn. Meanwhile, prices of beef round and chuck, the more affordable parts used in ground beef and roasts, have jumped almost 40 percent since March. Prices for loin and “short plate,” often used in short ribs, skirt steak, and hanger steak, have declined. “It’s an indication of what things mostly go to food service, but also what people want and what people can afford,” says Jayson Lusk, an economist who heads Purdue University’s Department of Agricultural Economics.

Longstanding relationships—and in some cases, contracts—with distribution partners are a hallmark of the agriculture industry. Breaking from those well-established channels is a challenge for many growers. Dog Star Hops, which grows hops on 2 acres in Charlotte, Michigan, is going into its fourth growing season. Nearly all of the company’s hops are typically sold to local brewers associated with Michigan pubs and taprooms, the fruit of years building relationships.

Now, those pubs are closed, and Dog Star’s contacts have all but disappeared. Sales of alcohol at grocery and liquor stores have boomed, but large brewers tend to get their hops from big growers in the Pacific Northwest. The craft brewers that survive the pandemic will have their pick of hops. More than 90 percent of 900 hop growers who completed a March survey by an industry group said businesses had already been affected by Covid-19.

“The glut is getting bigger every day, and now you’re starting to have to compete more on price,” says Jim Mikesell, Dog Star’s CEO. The company is looking into other uses for its crop. Sleepytime teas? Hops-stuffed pillows? CBD cream?

Federal and state regulators are relaxing some rules in ways that might ease the pain. The US Department of Agriculture temporarily suspended “country of origin” labeling rules that require most products sold in groceries to have labels noting where they’re from and how they were made. The department also said this week that it would buy $3 billion of meat, dairy, and other products directly from farmers and distribute them to food banks and nonprofits.

Some restaurants are helping keep suppliers afloat by selling their products in makeshift, in-store markets. Some of their suppliers are doing likewise: This month, the 30-year-old Restaurant Depot, a nationwide chain that sells supplies in bulk to other businesses, opened its doors to anyone wanting to buy industrial-sized quantities of food. (Shoppers at the store ordinarily need to show proof of a business license.)

Such moves help only on the margin. Many food producers and distributors are struggling to plan for an uncertain future. NPC, a company that coordinates between produce growers and restaurant chains, schools, and hospitals, will need to start planning for university and school cafeterias next month. “Right now, there are a lot of calls, a lot of concerns. We know [business] is going to be reduced,” says Tony Forsythe, the company’s president. “It’s in the lord’s hands now.”

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