Food supply chains have been under a lot of pressure these past few weeks. Consumption patterns are hard to predict and depend on government decisions that change from one day to the next.
In mid-March, consumers rushed to stock up on provisions for the pandemic. Dairy product shelves were emptied in record time at grocery stores. We even added an additional day in March in quick response to the growth in demand.
At the end of the month, retail sales returned to normal. The consumers who had already stocked up had less to buy. At the same time, the Quebec government announced that all so-called non-essential businesses, including hotels, restaurants and institutions (HRIs), needed to close. They form a huge segment of our market!
In fact, HRIs account for around 35% of our sales for all dairy products. In the case of cream, they make up nearly 60% of the market. That is a lot of surplus cream. Some of the waning HRI sales were transferred to the retail market, such as a percentage of the milk in certain cheeses and yogurt, but not all. As a result of the waning sales, daily milk needs dropped sharply and the cream market was saturated at the end of March.
We considered all the options in our attempts to place the milk. Butter-powder plants are working at full capacity. We are trying to find more storage space to process everything we can into butter, powder and cheese. The PLQ, together with a processor, also donated 2 million litres of milk to the Food Banks of Quebec, which will be processed into 200,000 kg of cheese. Other processing companies are also making donations. Everyone is putting their shoulder to the wheel.
Despite all these efforts, we still have a surplus that cannot be placed. That is why we need to adjust production. As you know, cows do not have a tap that we can use to control production. We had no choice but to dispose of some of this milk. No producer does this gladly. We are working hard to produce quality milk that will feed all families in Quebec, which is our motivation for getting up every morning.
But this is an extreme solution to meet the rapid fluctuations in demand. The markets are unpredictable. We have never seen anything like it. And this is the situation across Canada and in the rest of the world. It is a challenge that we will have to overcome together, with our industry partners. Showing the dumped milk on social networks will not bring the situation back to normal. It merely angers our fellow citizens and creates confusion. These images will stay in the collective imagination for a long time. We need to fix this.
That is why we had to implement measures to reduce the production volume as quickly as possible. Limiting tolerance ranges is the option that will get us the fastest results. It is our duty to try and reduce daily production. I am calling on all of you to try to collectively limit our shipments and not wait until the end of the month to withdraw surpluses from the supply chain. We all need to do our part to keep the supply regular throughout the month. I am convinced that we will be able to make this adjustment. The other P5 provinces are also taking measures and the P5 quota committee continues to monitor market needs every week so that quick adjustments can be made.
I know that many of you have seen the empty shelves in grocery stores and the rationing in consumer spending. This is an unacceptable paradox at a time when we have to dump part of our production. Nevertheless, processors assure us that despite some absenteeism issues, they are able to fill practically 100% of the orders they receive. The problem is somewhere in the chain between processing, distribution and the retailers.
We are also working on other fronts, in collaboration with the various levels of government. Our specific aim is to limit dairy imports and obtain assistance so that we can increase our donations to Food Banks. We have also publicly asked that retailers not ration milk and dairy products in grocery stores.
The war is not over. We are still in the early stages of this crisis and the situation changes from one day to the next. But we are fighting the battles one at a time. We have already been recognized as an essential service by the Quebec government. This assures us that our shipments and essential services will continue to be received. Furthermore, we obtained an exemption for transporting food products despite the thaw period. This will help us keep the supply chain operating even if the virus causes a decrease in employees.
Right now, the risk we must manage is the health of our workforce not only on farms and at plants, but also with transporters and suppliers. It is crucial that we keep the highest number of employees active at all levels of production. Every link in the chain is essential if we are to ensure that products make it all the way to consumers. That is why hygiene practices and social distancing are more important than ever. It is tempting to want to talk to our suppliers in person, but right now, the risk is too great. The extranet has all the information you need to know on which precautions you should take and which cleaning procedures you should perform. Read this information! You need to take these precautions and perform the cleaning procedures as instructed!
Quebec society has never seen anything like the chaos it is now experiencing. Everyone has sustained losses because of this crisis and the chaos it has caused. And we have not been spared either. We have had to make some tough decisions on how to adjust to the market fluctuations. No one has it easy, but we must continue to stand in solidarity with other producers and especially with society as a whole. Milk producers have always been involved in their communities across Quebec because it is one of their convictions. This feeling of belonging and mutual support is especially meaningful in harder times, like the one we are now going through.
For the time being, the milk supply chain is intact. Our employees are on the job despite the challenges of working remotely. We are continuously working with our processors to take stock of the situation in real time and find ways to adapt to it. As producers, we have a duty to reassure our consumers and remind them that we will always strive to deliver quality dairy products to them. This is our expertise, our way of helping them get through this crisis and our pride.
Local production has never been so important for Quebecers.
We are closing our ranks. Together, we will get through it.
Bruno Letendre, Chair of Les Producteurs de lait du Québec
April 5, 2020