Friday, March 27, 2020
CapitalPress.com
5
COVID-19
COVID-19 pandemic rocks dairy markets
By CAROL RYAN DUMAS
Capital Press
Two months ago, dairy
economists were forecast-
ing a good year for dairy
farmers, and farmers were
responding to higher prices
with more milk production.
Now, that additional milk
is only going to add to the
misery of markets turned
upside down by the corona-
virus pandemic.
Adjusted for the leap
year, milk production in
February was up 1.7%
from a year earlier, USDA
National Agricultural Statis-
tics Service reported.
“That’s a lot of milk.
Without exports, you can’t
hold strong prices,” Bob
Cropp, dairy economist with
the University of Wisconsin,
said in the latest “Dairy Situ-
ation and Outlook” podcast.
University of Wisconsin
University of Wisconsin professor emeritus Bob Cropp,
left, and Mark Stephenson, director of dairy policy
analysis at the university, see a rocky year ahead for the
dairy industry.
Dairy exports started out
gangbusters in January,
with total volume up 21%
over a year earlier and milk
powder volume up 41%.
The U.S. exports half of
its powder production, and
now there are bottlenecks
at ports, he said.
The futures market was
forecasting powder prices at
$1.25 a pound; now they’re
about $1.
Powder had been pulling
up the Class IV milk price,
and the Class III price was
trying to catch up, Mark Ste-
phenson, a fellow economist
at the university, said.
“Now we’ve got quite
the opposite. Powder prices
have dropped like a brick …
and those are putting a real
drag on the markets,” he
said.
The May futures con-
tract for Class IV milk has
dropped $5 per hundred-
weight since mid-January,
he said on Friday.
The futures market had
been forecasting Class III
and Class IV milk prices for
2020 in the $18 per hundred-
weight range. Those prices
are now below $16 for Class
III and below $15 for Class
IV.
“It’s terrible,” Cropp said.
In addition to recovery
in the powder market and
healthy exports at the end of
2019 and into January, other
U.S. apple retail sales get a boost
WENATCHEE, Wash. —
The coronavirus scare has
boosted retail sales of Wash-
ington apples 40%, but it also
may keep growers from get-
ting all the H-2A-visa foreign
guestworkers they need.
“Retailers are up 40% on
apples. With everyone stay-
ing home and online gro-
cery orders off the charts,
our shippers are double shift-
ing and running weekends.
Bag demand is crazy,” said
Brian Focht, manager of the
Washington Apple Grow-
ers Marketing Association in
Wenatchee.
“If this continues, it could
save the season for grow-
ers,” said Desmond O’Ro-
urke, world apple ana-
lyst and retired Washington
State University agricultural
economist.
The September-to-Sep-
tember sales season had been
bleak because the large crop
depressed prices.
“The last two weeks
has been an amazing turn-
around,” O’Rourke said.
“March is normally the turn-
ing point for the season. If it
doesn’t go well and prices are
down it affects the rest of the
season.”
But the downside of the
virus is that while Mexican
workers who worked in the
U.S. on H-2A (foreign agri-
cultural) visas in the last 12
months are being allowed to
return to the U.S., first-time
H-2A workers are not.
That’s a concern for Wash-
ington tree fruit growers, who
filled 26,226 jobs with H-2A
workers last year. Of that the
farm labor association Wafla
provided 12,000 workers for
16,000 jobs.
“Most of our employers
are crossing returning work-
Dan Wheat/For the Capital Press
Yesenia Gutierrez boxes film bags of small Honeycrisp
apples at Gilbert Orchards in Yakima, Wash., last Oc-
tober. Film-bagged apples are hot sellers during the
coronavirus outbreak apparently because they’re
viewed as more sanitary.
ers, but about 15% of our
employers say it will be an
issue,” said Dan Fazio, Wafla
director.
About 100 Wafla-provided
H-2A workers who finish con-
tracts by June 1 will be avail-
able to transfer to other grow-
ers, but they won’t be enough
to meet the need, Fazio said.
Growers are concerned
about that and having enough
worker housing if coronavi-
rus quarantines are needed,
he said.
Wafla and other farm
labor groups are working
to convince the U.S. State
Department to allow entry of
first-time H-2A workers.
Prior to consumers stock-
ing up on groceries due to
the coronavirus, Washing-
ton companies were shipping
2.5 million to 2.8 million,
40-pound boxes of apples to
retailers weekly, Focht said.
The week ending March
22, they shipped 3.8 mil-
lion boxes, up from 2.3 mil-
lion for the same week a year
ago, he said.
But last year’s crop was
smaller, so compared to a
similar-sized crop two years
ago, shipments are still up 1
million boxes for that week,
O’Rourke said.
Prices, still flat for most
varieties, are edging up for
Honeycrisp at $32 to $40.90
per box for standard grade,
medium size 80 apples per
box, according to USDA. It
was $26 to $36.90 on Feb. 6.
“We’re not actively going
out in the crisis and moving
the price up, but our ship-
pers won’t have to take low-
end prices. It should solidify,
increase our pricing slightly,
in June, July and August,”
Focht said.
Demand is high for apples
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in transparent, film bags,
because they are viewed as
more sanitary than apples in
bulk, Focht said, adding it
will be interesting to see if
demand for film bags contin-
ues after the crisis.
“We’re not set up to bag
50% of the crop but that’s
where demand is right now.
It’s challenging for shippers
and increasing their costs,”
he said.
Demand for apples, cit-
rus, potatoes and onions are
all high because they store
well, he said.
Pears are more of an
impulse purchase and hav-
en’t seen a big sales increase,
he said.
Apple exports have been
running 29.3% greater than
last year because of the large
crop and low prices, but that
will be slowed by the greater
domestic demand and the
value of foreign currencies
falling against the dollar, said
Todd Fryhover, president
of the Washington Apple
Commission, the industry’s
export promotional arm.
The coronavirus has made
it harder to ship apples to
China and promote Washing-
ton apples there, he said.
Equal Housing Lender
This institution is an equal opportunity provider and employer.
By DAN WHEAT
For the Capital Press
factors supporting markets
were lower milk produc-
tion, lower stocks of Amer-
ican-style cheese and good
domestic demand.
Higher milk production,
more cows and the spring
flush ahead are going to put
downward pressure on milk
prices, the economists said.
Now with schools closing
that milk for students will
have to go to cheese man-
ufacturing. And restaurants
are closing, conferences are
being canceled and people
aren’t traveling, Cropp said.
“People are still going to
eat … but with all that going
on, it’s going to hurt butter
and cheese sales, no ques-
tion about it. So we’ve got a
softer demand,” he said.
With product prices drop-
ping and a ready supply
of milk, processors aren’t
going to purchase a lot of
milk, he said.
Sales are also shifting
from foodservice to retail,
and Stephenson doesn’t
think those sales will match
the volume of dairy product
sales of a more normal situa-
tion, he said.
“We’re going to have
more milk than we can han-
dle without having prices
really depressed,” he said.
The coronavirus situa-
tion is rapidly evolving and
markets will feel its effects
for months. It’s having a big
impact on the world econ-
omy, and it will take time to
bounce back, the economists
said.
Instead of a long-needed
recovery year for dairy
farmers, 2020 might be the
worst year in the last five
years, Stephenson said.
“This is devastating,” he
said.
Potato prices jump as retail
demand goes ‘through roof’
By BRAD CARLSON
Capital Press
Potato prices jumped by
more than one-third in the most
recent week on COVID-19 con-
cerns, as consumers stocked up
to stay at home.
The fall 2019 crop was
smaller already on late planting,
fewer acres, reduced yield and a
frost-impacted harvest.
Mick Davie, with USDA
Specialty Crops Market News
in Idaho Falls, said prices for a
baled 5-pound film bag, non-
size-A, ranged from $6.50 to $8,
mostly $7 to $8, on March 16.
As of March 23, prices were
up to $11, and mostly $9.50 to
$10.
“Due to the shutdown of
most restaurants to just being
curbside or carry-out, foodser-
vice has considerably decreased
while retail demand has expo-
nentially gone through the
roof,” he said.
The Idaho Potato Commis-
sion advised retailers that ship-
pers in Idaho and throughout the
U.S. have been unable to keep
up with the surge in demand for
bagged product but that the sup-
ply of bulk potatoes is higher
given the drop in restaurant and
college foodservice sales.
IPC Retail Vice President
Seth Pemsler said the commis-
sion is advising retailers to real-
locate some merchandising
space from bagged potatoes to
bulk. The strategy aims to pro-
vide a ready supply of pota-
toes to display and purchase,
in various size and package
configurations.
The shift is possible in that
the state’s fresh potato crop
is roughly equally divided
between retail and foodservice.
More of the foodservice share is
available now.
“Until panic buying stops,
it is hard to keep retailers fully
stocked,” Pemsler said. “This
will help slow it down, as the
retailer will always have at least
some Russet potatoes on the
shelf.”
Meanwhile, many retailers
have moved to limit purchase
quantities.
Ryan Wahlen, sales man-
ager at Pleasant Valley Potato in
Aberdeen, Idaho, said total sales
have held up for the most part as
the surge in retail demand helps
mitigate the foodservice loss.
But the foodservice segment
must recover, “or it will have
an impact on the market in the
short term — and everybody in
the long term.”
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