Covid19 Restrictions Bite the Dairy Industry Again
Posted on: 02/11/20
The weekends Covid19 Lockdown announcement is a big blow, particularly for middle ground liquid processors reliant on hospitality food service/restaurant business.
As soon as the lockdown announcement was made on Saturday evening, orders were cancelled or reduced and this morning two processors report deliveries to customers were turned away. The other impact has been the immediate issue of cash flow delays for deliveries already received as customers pull in the reins.
All those lost sales at restaurants, stadiums, cinemas and theatres with empty seats will be a huge resilience test to all middle ground processors and its to be hoped they all succeed in navigating their way through the turmoil.
Should the restrictions be extended for the rest of 2020, it will be a huge blow to the demand for dairy at the busiest time of the year for the restaurant trade.
Schools and Educational establishments remaining open is a positive and will hopefully mean the emergency actions taken by some processors earlier in the year will not be repeated. To be fair most are better prepared, less exposed, claim to be in a better situation and more resilient.
In addition, today several processors are reporting increased demand from retail and wholesale Cash and Carry’s and its worth noting the increased restrictions come at a time of year when production is low and processing capacity plentiful.
Meanwhile, cheddar cheese processors like Barbers report strong demand, firming prices and lower cheese stocks. This should help underpin spot prices which are holding today at 30 to 31ppl with cream prices also holding up.
Its time to buckle up and to hope the surplus milk can be profitably traded and/or turned into cheddar negating the necessity to have liquid farmgate milk price reductions early in 2021. It’s nothing short of a disaster for processors who were already concerned about the Brexit negotiations and how uncertain they look with less than two months to go.