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US dairy giant Land O'Lakes is selling record amounts of butter as consumers cook more at home during the COVID-19 pandemic, reported Bloomberg on October 30th.
The Minnesota-based cooperative expects butter sales to reach 275 million to 300 million pounds (124 kg to 136 kg) in 2020, an increase of more than 20% from a normal year, said CEO Beth Ford. This more than offset the decline in food services as US lockdowns cut demand from restaurants, which typically accounted for 15% -20% of the company's business.
“A lot of times, even for retail, what you do is you make a lot of butter because it's peak milk production, and you store it for the key season,” Ford said.
“But the buying was so strong that we didn’t do that because we were selling immediately.”
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The company adapted its production lines to meet new market demands, Ford said.
Although best known for its dairy products, the company's Purina unit, which makes animal feed, also saw an increase in sales.
Land O'Lakes' profits increased fivefold in the third quarter to US$$66 million and by 22% year-to-date, a company statement said.
Dairy markets fluctuated during 2020 as prices fell due to COVID-19 and then soared when the United States Department of Agriculture (USDA) moved to buy its Farmers to Families Food Box program, said the Bloomberg . Ford expected demand to continue through the fall and winter.
The aid programs helped maintain farm profitability, pushing U.S. milk production growth above the historic annual rate of 1.5%, a report from the Rabobank .
Prices were expected to fall when government support ended, Ford said.
“There will be disruptions, we don’t all understand what the path to reopening will look like,” she said.
Demand for butter, which was typically strongest in winter, could also face challenges as some consumers avoid large seasonal gatherings in an effort to maintain social distancing.
At the end of August, about 372 million pounds (169 kilograms) of butter were in cold storage and inventory levels would depend on demand during the “less-than-normal holiday season,” said the Rabobank .
This text was automatically translated from English.
Source: OFI International
