Why would American dairy farmers rather dump all their fresh milk than give it to the poor?
After reading this article, if it were you, you would do the same.
One. The milk that was dumped
In 2019, the outbreak of the new crown epidemic has exceeded 1 million deaths in the United States so far.
In addition to the threat of death, the epidemic has also brought serious social impact to the United States .
On the one hand, the city people lined up for hours to grab supplies, and on the other hand, on the farms, a large amount of food was destroyed.
Millions of pounds of potatoes and cucumbers rot in warehouses, millions of gallons of milk are dumped into sewers, and you might think that all that is dumped is expired products that can't be sold, but the opposite is true, these produce are the freshest at the time.
So why did they dump it?
In the United States, dairy products have a simple supply chain:
First, the cows are milked on the farm, and the milk is put into tanks and sent to the processor, who makes the milk into various forms of products, such as liquid milk, solid cheese, etc., and then sends it to the supermarket for consumers to buy.
In addition to supermarkets, about half of the products are aimed at other avenues, such as schools and social enterprises, such as Starbucks in the United States, which uses hundreds of thousands of gallons of milk every day.
However, due to the epidemic, schools and social enterprises have closed, and milk orders have been cancelled, leaving only the supermarket as a channel, while the milk produced by dairy cows remains unchanged and continues to be delivered to processors.
This creates a phenomenon of oversupply, so milk cannot be sold.
You may ask, although schools and social enterprises do not need milk, but supermarket orders have risen?
Indeed, in order to hoard more goods under the epidemic, people must have snapped up a lot of milk in supermarkets, so can we put dairy products from other channels in supermarkets to sell? Wouldn't that balance supply and demand?
Friends who think of this are smart, but alas, the answer is no.
Because the appearance of dairy products offered to schools, social enterprises and supermarkets is different, because the dairy products sold to social enterprises are packaged in large capacity.
For example, 19 liters of large bottles of milk, or 18 kilograms of cheese cubes, if these are sold in supermarkets, customers will not buy them at all, because dairy products have a short shelf life and they do not need so much.
"You can't just take a 500-pound bucket to someone's house and say, 'This is the cheese you want.'"
Can we modify the shape of the product and sell it in the supermarket?
Still not. For example, 18 kilograms of cheese cubes, if cut into a size acceptable to the average consumer, must be introduced with specialized machines, and the cost of the machine is several million dollars, which is unaffordable.
In summary, in the era of the epidemic, due to the oversupply, most of the milk was forced to be unsalable, and the large amount of milk produced on the farm had nowhere to go but to be dumped.
Two. Why can't milk be given away?
Speaking of which, smart people will ask: Since you can't sell it, can't you sell it at a reduced price? At least better than just dumping it out,
How much money can be recovered?
It may sound like a little reasonable, but in fact, dairy farmers would rather dump it than sell it at a low price, for the simple reason:
First, from milk to finished products, there are multiple processes such as processing, packaging, and transportation, and the cost of each process is placed here.
If you sell at a low price, not only can not earn money, but will also lose money, how much to sell, how much to lose, so think, it is better to dump it all, at least will not lose money.
Second, the current environment is that there is more than demand, and only by destroying the surplus products and restoring the balance between supply and demand can we sell them all at normal prices.
Third, if you sell milk at a reduced price, congratulations, you have not only offended your peers, but also consumers.
For example, if the general market price of milk is 1,000 yuan, and you sell 500 yuan at a loss in order to recover some money, then your customers will think that your milk is only worth 500 yuan, so if this is the case, then you sell 1000 I will not buy, unless you sell 500.
So your business is over? Therefore, selling at a reduced price is completely an act of harming others and harming themselves, and it is better to dump the milk directly.
So the question arises again, if the price reduction does not work, can not let the cows not produce milk?
Don't say it, it really doesn't work. If you don't milk the cow, the cow can't stand it, from mastitis to breast necrosis and never milk.
Thinking like this, do you think that the milk still has to be milked, and it still has to be poured after squeezing?
The problem is not over here, some friends may have one last question: since it can't be sold, can't it be sent directly? Is it better to give it to the poor to drink than to throw it away and waste it?
You think you're doing good, but in fact, you're destroying yourself.
Because once you give milk away, then no one buys your milk, the demand is gone, the supply and demand relationship is more unbalanced, more milk is slow to sell, and then a vicious circle is formed.
At that time, you will have to go bankrupt completely.
Because of this, dairy farmers can only dump milk or kill cows directly to save money for feed.
You can accuse them of wasting resources, but from their standpoint, in order to stop the loss in time, this waste is really forced.
In fact, many dairy farmers cry bitterly when they pour milk and kill cows, after all, this is not only a material loss, but also watching their labor and energy invested in vain.
Looking back at the supply chain of milk in the United States, we will find that because of the epidemic, half of the demand has been cut off, and the entire supply chain has been seriously affected.
Remember the Great Depression in the Middle School History Textbook? The picture of the capitalist pouring milk seems to be vividly remembered.
Now analyze, you will find that it is not that Americans are too inhuman, but because of the severe economic recession, people's consumption power has generally declined, many people can not afford to buy milk, and milk is constantly producing, resulting in oversupply, so the price of milk plummeted.
For example, in the hometown of President Hoover at that time, 1 liter of milk could only sell for about 2 cents, and at this price, let alone make money, as long as you dare to sell, the family will have to be hollowed out.
That's why people pour a lot of fresh milk into the Mississippi River.
It can be seen that dumping milk is not a simple moral issue, behind which a lot of market and economic knowledge is involved, and there are many similar phenomena, such as:
Why would a grower prefer to let the fruit rot on the tree rather than sell it cheaply? Why would developers prefer a house to be empty rather than discounted?
In fact, this is the truth.
So, is there a way to change this situation? If the economy has been depressed, or if the epidemic has not ended, can we just sit back and wait?
In fact, this is not the case, for example, this time the American dairy farmers have thought of many ways.
Solutions
First, can we set up a body to limit cow production nationwide?
Limiting production is equivalent to limiting supply, then supply and demand can be balanced.
Second, can we add new channels? Since the two channels of schools and social institutions have been interrupted, the addition of new channels can solve the problem of too little demand.
For example, the government buys milk, so that the balance between supply and demand can be restored, which is conducive to maintaining market stability.
Finally, there is actually another way to export this excess milk to other countries, such as China.
But the question is, who made the U.S. want to fight a trade war? Speaking of which, I have to mention that it is purely self-inflicted!