With the necessary orders to work from home, stay at home and most importantly, practise social distancing as a result of the coronavirus pandemic, most food service trade has stopped or at least been severely curtailed worldwide.
The International Dairy Foods Association is expecting COVID-19 to have a significant impact on the US dairy industry, with a 10 per cent oversupply predicted due to stay-at-home directives and the sharp drop in food service trade combined with seasonal supply increases. As such, dumping in some northern hemisphere countries is expected to continue as the pandemic wears on.
So, the question is what will this mean for Australia's milk?
ADIC chairman and Australian Dairy Farmers president Terry Richardson assures us there is little risk of milk needing to be dumped here.
In Australia we are now approaching the tail end of the season, with less milk being produced nationally. In 2018/19 the retail sector (i.e. supermarket and grocery sales) absorbed 65pc of all milk sold in Australia. So, the retail sector accounts for a larger share of national dairy consumption, compared to food service and compared to the rest of the world.
Queensland's continued fall in production (currently 13pc below year on year), which has been largely caused by ongoing drought and poor farmgate prices, has ironically been a blessing in disguise. Despite the drop in food service sales and consumption, the supply / demand balance currently remains relatively even.
So at least for now, our dairy industry is relatively secure. QDO and other state industry bodies are still working to get a higher farmgate price for our farmers, but the pandemic has inevitably put this important agenda item on hold while we continue to ensure the continued supply of dairy through COVID-19.
