The hashtag #quarantinebaking has been trending on social media since the height of the pandemic-induced stay-at-home orders in March. Baking essentials like flour and butter have become hot commodities, and companies like dairy giant Land O’Lakes are scrambling to churn out their products fast enough to keep up with the torrid demand.
The $14 billion farmer-owned cooperative is on track to sell a record 300 million pounds of butter this year, and CEO Beth Ford doesn’t see demand slowing down anytime soon.
“I expect to see elevated levels through the holiday season,” she said at the Yahoo Finance All Markets Summit. “We’re starting to see that our order book is really quite full for October as we step into that filling of retail shelves.”
And it’s not just butter. Ford said Land O’Lakes’ cheese business is also booming as people do more snacking while at home.
Ford says one of the biggest challenges farmers have had to face during the pandemic has been the difficulty in shifting from food service, such as supplying restaurants and schools, to retail production.
“There’s a difference between manufacturing a 640-pound block of cheese and cheese that you buy at the grocery store,” she said. “This distortion means that the supply chain can’t immediately react and shift.”
“It’s not that there's not enough milk to make the butter,” said Ford. “Milk production has been strong for dairy producers. But we are operating — literally, we had to reduce the variety of SKUs. We're maximizing production, we're reducing SKU variety, we're in a good position as we get into the key [holiday] season.
‘Positive signs’ for farmers
Ford said farmers are waiting to see what foodservice demand is like early in the new year, as more businesses re-open during the pandemic.
“Will there be a shift? How quickly does that open and what is that dynamic?” she said.
It’s been a tough couple of years for U.S. farmers. They’ve been hit hard by the double whammy of trade pressures and the pandemic. President Trump’s trade wars with China and Europe have led to tariffs on agricultural exports including soybeans, corn and peanuts while the pandemic upended global supply chains, and restaurant closures sapped demand.
Farm bankruptcies continue to rise across the country and the American Farm Bureau said debt in the farm sector is expected to rise by 4% to a record $434 billion this year.
The White House continues to funnel money to Trump’s rural base. Aid to farmers is expected to hit a record $46 billion this year, and Ford said there are signs the worst of the financial pain for farmers has peaked.
“It’s not stable, but there are more positive signs than there have been for the last couple of years,” she said. “Trade has started to pick up in China. We're seeing a lot of shipments, especially for soybeans and hogs into China.”
Alexis Christoforous is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AlexisTVNews.