Iowa’s dairy industry faces challenges from supply chain disruptions
Doug Stensland can’t always trust that the semi-trucks filled with the supplies he needs to run his family dairy farm and processing plant in Larchwood will show up on time.
After one truck carrying milk jugs arrived a little late, Stensland said he shifted how he runs his operations.
“After that it was like ‘Boy we have to keep everything ordered way ahead,’” Stensland said. “We used to be able to order and keep a real lean inventory, but now we’ve gotten to a point where we have to stock up a lot of inventory just to make sure we don’t order it and it’s not available.”
Nationwide supply chain disruptions have impacted businesses across the country -- and Iowa’s dairy industry is no exception. Transportation and logistics issues have touched all levels of dairy production, from local farmers to large dairy exporters.
In most cases, agriculture economist for Iowa State University Chad Hart said supply isn’t the major issue. The problem is connecting the supply to the demand, and the chain link between many products has been disrupted.
“If the feed additive is in China, but the need for it is here in an Iowa dairy herd, then that doesn’t help you, unless you can deliver it where it’s needed,” Hart said.
On the local level, farmers are facing obstacles in receiving the tools they need to continue business. At Milk Unlimited Dairy, a farm in Atlantic with 34,000 cows, owner Christy Cunningham said the first shortage she noticed was in personal protection equipment used for milking cows at the start of the pandemic.
“Not only were we not able to get them, but when we were, the inflation of the price was enough to make you take notice,” Cunningham said.
Now, equipment like dry tubes, ear tags, feed additives and packaging for milk products are more difficult to stock and require a lot more planning. Between shortages and rising prices, Stensland said the last two years have been very hard for his business.
“Everything’s gone up,” Stensland said. “It’s cut into profits, there's no doubt about it. It's just a matter of how far we can be able to grab that back. Our sales are tough anyway. Right now, it’s kind of a hard balancing act.”
Cunningham usually employs around 30 to 35 people on her farm, but right now she’s about three to four employees short. That’s after giving two rounds of raises just this year.
“Milking cows probably isn’t the sexiest of jobs out there,” Cunningham said.
Iowa State University dairy specialist Fred Hall said labor has become one of the largest issues for dairy farmers around the state. Many farmers are competing with higher wages at manufacturing jobs at places like Tyson Foods or Seaboard Triumph Foods.
“You don’t want to lose an employee because it costs too much to train folks,” Hall said. “There’s only so much farmers can do to increase wages before it costs more to produce than what they’re getting out of the business.”
“It’s cut into profits, there's no doubt about it. It's just a matter of how far we can be able to grab that back."Doug Stensland
At Stensland Family Farms, workers’ wages have increased throughout the year to keep employees from leaving for jobs at nearby manufacturing plants in Sioux County, Lyon County and Sioux Falls.
So far, it’s been a successful tactic for keeping employees on the farm. But, he’s not sure he can continue to raise wages and keep them competitive.
“We had our labor budget figured out back in 2020, and now we’ve just blown that out of the water,” Stensland said. “It took us a lot of dollars to make sure we kept our people.”
Moving products overseas
Supply chain disruptions have also affected how much dairy can move overseas. Exporting milk products is becoming a bigger challenge for large dairy processors in the dairy industry.
Shipping containers are in high demand and in short supply. Hart said the perishable nature of the products puts them in a tough position.
“They often tend to have a fairly short shelf life. Meaning we can’t wait for months to get a shipping container in order to ship a container full of yogurt. You need to move that in days,” Hart said.
Even when dairy exporters can book a shipping container, oftentimes the containers may be too far to help move products that need to be moved quickly. Blocked ports and a shortage of truck drivers to haul products all impact the amount of product the dairy industry is able to move.
The National Federation of Milk Producers estimated a nearly $1 million loss due to shipping disruptions in the first six months of the year.
Executive Director of Iowa State Dairy Association Mitch Schulte said the Iowa dairy industry has felt this loss. He said transportation concerns have resulted in a loss of opportunity for many state dairy producers.
“Anything that impacts our export market, impacts the price on our dairy farms. Even one container being delayed is an issue, let alone more than that,” Schulte said.