Located at opposite ends of the supply chain, grocers and dairy farmers have faced their own sets of challenges as they’ve tried to adjust to the circumstances created by the COVID-19 pandemic over the last year.
On one end of the spectrum, during the particularly chaotic weeks at the beginning of the pandemic, some dairy farmers were being asked to dispose of milk as a result of shut-downs and supply chain issues.
On the other end, grocers were placing limits on dairy items that were in high demand.
“When the pandemic started, we had to put limits on milk; butter was a real obstacle to get. We had holes,” Darrin Kuehn, director of store operations for Festival Foods, said during a recent Professional Dairy Producers of Wisconsin Dairy Signal webinar.
Many dairy farmers were “aghast” at the limits on gallons of milk, Brandon Scholz, president and CEO of the Wisconsin Grocers Association, said, but from a grocery perspective, their priority was to make sure that all of the customers had access to milk.
“Until it caught up, grocers had to manage their customers’ expectations, their inventory and their suppliers,” Scholz said. “Fortunately, it was a short period of time, and the suppliers and others helped us move through it. But it was really tough those couple of weeks.
“Grocers were getting hammered by customers not understanding what the situation was, but after we had the opportunity to educate ... with the help of (the Department of Agriculture, Trade and Consumer Protection) and Dairy Farmers of Wisconsin, that education kind of helped ease the angst, which was a natural angst dairy farmers had.”
Trust in the supply chain has now been restored to the point where butter and milk can be advertised on sale without fear of running out of stock, Kuehn said.
“The suppliers, the dairy industry, everyone’s doing everything they can to help us stay in stock and meet the demand of the guest,” Kuehn said.
But while the grocery and dairy industries have differing challenges in some respects, there are also areas where the two sectors are facing similar hurdles.
One of those similarities is often operating on razor-thin margins, Scholz said.
“When you go grocery shopping ... that grocer is only going to make a few pennies on that dollar. It’s one of those things we do share with dairy farmers,” he said. “It’s a very tough, competitive business.”
If a customer spends $100 on groceries, after covering its expenses, a grocer is likely to make about 80 cents on that purchase, Scholz said. It could be a little more or a little less, depending on the store and the makeup of the types of good in a purchase — for example, fresh produce tends to have a higher margin than shelf stable foods do.
The dairy and grocery industries may also bear similarity in terms of labor pool, specifically when looking at the people who look to those industries for their first jobs.
Festival doesn’t do much advertising for their entry-level positions, Kuehn said, because they’ve worked to create an environment that has parents encouraging their children to look to them when they’re entering the workforce.
Creating that kind of environment and having clear expectations can help dairy producers attract good workers, too, he said.
“People want to know two things when they get hired: they want to know how to behave and what happens to them when they don’t. ... You define that early on and then you hold them accountable to it,” Kuehn said.
Kuehn also recommended that dairy farmers looking for workers reach out to schools to help introduce themselves to students who might be looking for that kind of work opportunity.
And once hires are made, Kuehn said that creating a culture of appreciation and being kind to employees are good ways to make them want to stay around.
In the midst of a pandemic, putting in safeguards, like masks, sneeze guards, and more, has also been a way that companies have been able to show employees that they are appreciated, Scholz said.
When the COVID-19 pandemic hit and there were suddenly fewer options for mealtime (no or limited access to restaurants, bars, etc.), consumers started to head back to the dinner table more, Kuehn said. The effects of having fewer places to go out to will likely continue to persist going forward, he said.
“(Consumers) adapted,” Scholz said. “They learned how to cook. They learned what their family liked. It meant that they got to spend some time together that maybe they hadn’t before.”
Festival has been able to take advantage of that trend with advertisements like “build your own pizza” or “build your own tacos,” but that kind of advertising also requires the store to have a set supply of items for those kinds of promotions, Kuehn said.
Also, as people are learning to cook more, sales of specialty cheeses have been up in stores, Kuehn said. Other categories of dairy, like creamers and shredded cheese, have been hit or miss, he said.
Another trend that is likely to stick around is the online shopping method — dubbed as Click N Go at Festival — that allows customers to pick out their groceries online and then pick up the groceries curbside at the store, Kuehn said.
Sustainability, in particular buying local, has continued to grow as a trend, going beyond dairy and to all aspects of farming in the state, as well, Scholz said.
“Fifteen, 18 years ago, ‘buy local’ was just kind of not there,” he said. “’Buy local’ was pumpkins and corn.”
But as relationships between grocers and local farmers have grown over time and as DATCP has been able to help farmers with business plans that look beyond traditional farming, the buying local movement has grown as well, Scholz said.