Dairy supply

Dairy supply chain issues continue…

Transport and labor problems continue to disrupt the milk supply chain. Over the past few years, dairy factories have had to cut production continuously due to a variety of labor problems, including a persistent shortage of workers, sick employees, people exposed to Covid having to be isolated and limited visa’s for workers.

In addition, the freight industry faces many problems, causing further disruption to the dairy supply chain, according to Daily Dairy Report analyst Betty Berning. “Transportation is critical to the dairy supply chain,” Berning said. “Trucks, trains and container ships are essential parts of dairy infrastructure, whether they transport milk off the farm, raw materials to cooperatives, processors or finished products for wholesalers and retailers”.

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Turnaround time of milk distribution is critical

Because milk and some dairy products are perishable, they must be transported quickly. When transportation is not available, Berning said milk has to be thrown away, and manufacturers often have to bear the cost.

One of the most difficult and noticeable problems in the freight industry today is the cost of fuel, which is much higher today than it was a year ago. Fuel costs increase shipping costs, hindering the transportation of milk and dairy products. “Higher freight means less ice cream is shipped from the West Coast to the East Coast, and producers are less likely to buy excess milk from other parts of the country unless it’s discounted enough to make up cover the additional shipping costs,” Berning said.

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Focus on local cheese production

More milk is being processed locally rather than being shipped nationally to where it is needed, for its most profitable use or to products that are most in demand.

Where cheese is the dominant dairy product, processors are producing more cheese instead of shipping excess milk out of the state. This strategy explains why cheese stocks continue to grow, even though demand remains.

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Traffic problems continue to exist globally and nationally. Last month in Oakland, California, independent carriers protested California Assembly Bill 5 (AB5) at the Port of Oakland, the eighth-busiest container port in the United States and a key port for shipping carriers’ cargo.

California dairy producer offshore, effectively closed the port because trucks had blocked access to the port and dockers refused to report work, citing security concerns.

While business has returned to normal since then, the port can take several weeks to clear the backlog. Without a resolution on AB5, further protests could erupt, once again slowing supply chains in the country’s largest dairy-producing state. “The rail industry presents another potential supply chain problem,” Berning said. “The unions and the railway companies have been negotiating for two years, and now union railway workers are threatening to strike for higher wages and health care benefits.”

President Joe Biden recently appointed a committee to help broker a deal between the railroads and unions to prevent what could become the first railroad strike in 30 years.

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Source: Dairy Herd

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