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April 18, 2020, 11:01 a.m. EDT

Shuttered schools, plunging milk demand led to race among dairy farmers to tap small-business rescue program before funding ran out

Compeer Financial, a Farm Credit Lender, secured about $125 million of Paycheck Protection Program funds for clients

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By Joy Wiltermuth

Getty Images
A family farm is Wisconsin.

Got too much milk?

Dairy farmers, faced with shuttered schools and dwindling demand for milk amid the pandemic, applied in droves for the Trump administration’s $350 billion small-businesses aid program, until Thursday when money for the program ran out.

“The COVID-19 situation has significantly disrupted the supply side of the dairy economy,” said Paul Kohls, chief lending operations officer at Compeer Financial, one of the nation’s 72 Farm Credit lenders.

“It’s very challenging,” Kohls told MarketWatch on Thursday. “Either dairy farmers are dumping milk or the processors are dumping milk, because the demand isn’t there.”

Compeer lends to rural farm and agriculture producers across Illinois, Minnesota and Wisconsin, but spent much of April helping existing clients tap the Small Business Administration’s new Payroll Protection Program, which Kohls hopes will soon get more funding from Congress.

Read : Lawmakers fail to replenish coronavirus-aid program for small businesses on day it runs dry

Rural farmers across the food-production chain have been reeling from several seasons of severe weather, trade tensions with China and depressed commodity prices, and now must also navigate a pandemic during the critical planting season.

While coronavirus-stricken pork and beef producers are asking for some of the $9.5 billion worth of agriculture producer aid in the $2 trillion federal stimulus bill pass last month, the pandemic also has slowed restaurant demand for farm and dairy products to a trickle.

See : Restaurants and hotels, devastated by coronavirus, face long and painful recovery

But for dairy producers, there’s the added shock of nationwide school closures, affecting an estimated 25 million public students, per Education Week’s tracker , and a key source of demand for fluid milk.

May futures for Class III milk  slumped 0.8% Friday to trade at $12.01 per hundredweight, after settling Thursday at their lowest level since Sept. 25, 2009, according to Dow Jones Market Data. Prices have plunged more than 25% since March 31, when California’s Bay Area tightened its early lockdown, steps other major U.S. cities followed to stem new COVID-19 cases.

“The Paycheck Protection Program is allowing many dairy operations to pay employees,” Kohls said. “Just because there is less demand, farmers still have cows that need to be milked and animals that need to be cared for, despite the economic hit being taking right now.”

Coronavirus updat e : 2.08 million cases worldwide, 138,487 deaths; Trump unveils guidelines reopening of economy

The Trump administration has made the Paycheck Protection Program a cornerstone of its pandemic response. And while it got off to a rocky launch on April 3, the lure of forgivable loans of up to $10 million has proved popular in a country grappling with a health crisis, partial economic shutdown and the sudden loss of millions of jobs.

“It’s very tough out there,” said Todd Van Hoose, chief executive officer at the Farm Credit Council, the trade association for the Farm Credit System, adding that thousands of farmers have applied for small-business aid, but stressed more help is need to shore up farm country.

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