Phase Five Supply Chain – With a Message From A Dairy Farmer….

•Phase One was retail. •Phase two was distribution. •Phase three was the space between processing/manufacturing and distribution. •Phase four was raw material supply to manufacturing. •Phase five is consumer packaging capacity, and bulk storage inventories.

Most Americans were not aware food consumption in the U.S. was a 60/40 proposition. Approximately 60% of all food was consumed “outside the home” (or food away from home), and 40% of all food consumed was food “inside the home” (grocery shoppers).

Food ‘outside the home’ included: restaurants, fast-food locales, schools, corporate cafeterias, university lunchrooms, manufacturing cafeterias, hotels, food trucks, park and amusement food sellers and many more. Many of those venues are not thought about when people evaluate the overall U.S. food delivery system; however, this network was approximately 60 percent of all food consumption on a daily basis.

The ‘food away from home‘ sector has its own supply chain. Very few restaurants and venues (cited above) purchase food products from retail grocery outlets. As a result of the coronavirus mitigation effort the ‘food away from home’ sector has been reduced by 75% of daily food delivery operations. However, people still need to eat. That means retail food outlets, grocers, are seeing sales increases of 25 to 50 percent, depending on the area.

♦ Phase Five – The retail consumer supply chain for manufactured and processed food products includes bulk storage to compensate for seasonality. As Agriculture Secretary Sonny Perdue recently noted “there are over 800 commercial and public warehouses in the continental 48 states that store frozen products.”

Here is a snapshot of the food we had in storage at the end of February: over 302 million pounds of frozen butter; 1.36 billion pounds of frozen cheese; 925 million pounds of frozen chicken; over 1 billion pounds of frozen fruit; nearly 2.04 billion pounds of frozen vegetables; 491 million pounds of frozen beef; and nearly 662 million pounds of frozen pork.

This bulk food storage is how the total U.S. consumer food supply ensures consistent availability even with weather impacts.  As a nation we essentially stay one harvest ahead of demand by storing it and smoothing out any peak/valley shortfalls. There are a total of 175,642 commercial facilities involved in this supply-chain across the country

Few Americans are aware of this.  However, that stored food supply is the supply-chain for food manufacturers who process the ingredients into a variety of branded food products and distribute to your local supermarket. That bulk stored food, and the subsequent supply chain, is entirely separate from the fresh food supply chain used by restaurants, hotels, cafeterias etc.  For almost 8 weeks the retail supply chain has been operating beyond capacity and the burn rate of raw food products is up a stunning 40 percent.

Those bulk warehouses, the feeder pools for retail/consumer manufactured food products, are starting to run low. Believe me: (1) we don’t want to find out what happens when those 800 mass storage facilities run out; and (2) the food supply chain will be a big part of President Trump’s decision-making on reopening the economy thereby re-opening restaurants, cafeterias, etc…. and switching consumption back to fresh supply.

This “bigger picture” is not being considered by politically-minded governors, DC politicians, and public health-centric advisors who focus exclusively on the virus.

Additionally, there are very specific issues within each supply chain (commercial and consumer). It is not as easy as people think to move the commercial supply-chain (restaurants etc.) into the consumer supply chain (grocers). First, there are simply packaging capacity issues.  Additionally, there’s an entirely different set of regulations on the processing side for the consumer supply chain.

One dairy farmer helps explain:

Are we dumping milk because of greed or low demand, no. It’s the supply chain, there are only so many jug fillers, all were running 24/7 before this cluster you-know-what.

Now demand for jug milk has almost doubled.  However, restaurant demand is almost gone; NO ONE is eating out. 

Restaurant milk is distributed in 2.5 gal bags or pint chugs; further, almost 75 percent of milk is processed into hard products in this country, cheese and butter. Mozzarella is almost a third of total cheese production; how’s pizza sales going right now??

A bit of history – Years ago (40+) every town had a bottler, they ran one shift a day, could ramp up production easily.  Now with all the corporate takeovers (wall street over main street) we are left with regional “high efficiency” milk plants that ran jug lines 24/7 before this mess, no excess capacity.

Jug machines cost millions and are MADE IN CHINA. Only so many jugs can be blown at a jug plant.  We farmers don’t make the jugs, damn hard to ramp up production.

I’m a dairy farmer, believe me NO dairyman likes dumping milk; and so far there is NO guarantee they will get paid. Milk must be processed within 48 hours of production and 24 hours of receipt in the plant or it goes bad. Same with making it into cheese and butter, and neither stores well for long.

The same supply line problems exists where restaurants are supplied with bulk 1 pound blocks of butter or single serv packs or pats; and cheese is sold in 10 to 20 pound bags (think shredded Mozzarella for pizza).  Furthermore, it is not legal for this end of the supply chain to sell direct to consumers in most states.

Take cheddar cheese for instance; it goes from mild to sharp to crap in storage. Butter, frozen, only stores for so long and then must be slowly thawed and processed into other uses as it gets “strong”.  At Organic Valley we cook it down into butter oil or ghee for cooking.

We are headed for the same problem with canned veggies.  The vast majority of produce comes off and is processed in season; canned or frozen.  The supply is already in cans for the season; restaurants use gallon cans or bulk bags of frozen produce.

At some point we will run out of consumer sized cans in stock because home size sales are up (40%+) and restaurant sales are almost nonexistent.  Fresh produce out of U.S. season comes from Mexico (different climate).  I’m talking sweet corn, green beans, peas, tomatoes, all veggies are seasonal in the USA.  Fresh, out-of-season, row crops are  imported.  (There are exceptions, like hydroponic grown, but small amount of total).

Someone mentioned “time to raid all those bins of corn”.  Those bins on the farm contain yellow corn, cattle feed and totally unfit for human consumption, now or at harvest.

Eggs? Same problem.  Bakeries and restaurants of any size use Pullman egg cases, 30 dozen at a pop, 30 eggs to a flat, 12 flats to a case.  There are only so many 1 dozen egg cartons available and only so many packing machines.

Industrial bakeries and processors of packaged food buy bulk liquid eggs, no carton at all.  Also in many states it is illegal to sell this supply-chain directly to consumers. 

On your standard buffet of any size, do you really think they boil eggs and peel them? They come in a bag, boiled and diced; those nice uniform slices of boiled egg you see on your salad, a lot of them come in tubes boiled and extruded at the same time, just unwrap and slice. Your scrambled eggs come in a homogenized bag on most buffets.

Another example of Main Street being gutted and “improved by wall street” NO local egg processors available or many small egg producers either, all corporate and huge, contracted to sell to the corporate masters.

This is a warning the same problems exist in all supply chains.

The supply chain is farked.

David Osterloh,
61-year-old dairy farmer

This entry was posted in Big Government, Big Stupid Government, CDC, Coronavirus, DHS, Donald Trump, Economy, FEMA, Infectious Disease, Prepper, President Trump, Uncategorized, US dept of agriculture, USA. Bookmark the permalink.

268 Responses to Phase Five Supply Chain – With a Message From A Dairy Farmer….

  1. frogman says:

    Back in the early 60s I remember the Eggman coming into the house and putting the eggs in my refrigerator, there was no package. His farm was about 2 miles away. He was an exceptionally nice guy.

    I remember the Milkman delivering a gallon of milk, and other dairy, he also came in the house. His farm was less then a 1/2 a mile away. He was a very solid and nice gentleman.

    I remember going to the Butcher/Grocery store, the barn and some animals were out back. He was nice man and always remembered my name (I was real little), joked telling me to fill the cart up. He also would deliver if we were unable to get to the store.

    Apples and Pears came from an orchard 2 miles from our house.

    My family baked our our bread and cakes etc.; We made our own pasta too. Made our own wine, but I was too little to try it. We had a personal honey supply too.

    We had a large garden that game us most of are tomatoes lettuce, carrots, potatoes, radishes and onions, but there were many vegetable farms in the area. It is amazing what even a small plot yields when properly cultivated. A lot was “canned” for winter.

    Other then grain, sugar and some fruits such as bananas and oranges all our food was sourced well with in 5 miles of us. We also bought fish, from a fish market about 4 blocks away.

    I lived in a suburb in Connecticut at the time, the same could be said of most cities in CT at the time also with maybe going 15 miles to where the food came from I am not sure if times were really better or not, but we certainly eat better.

    I wonder what happen. The federal government policy to eliminate small farming in Connecticut, to urbanize it was mostly to blame I think. Social pressure for everyone to work many hours away from home also.

    I miss it.

    Liked by 14 people

    • Ausonius says:

      Your last paragraph explains what happened: the Interstate highway system/mass transit allowed e.g. a good chunk of Connecticut to become a suburb of New York City.

      The federal government policy to eliminate small farming in Connecticut, to urbanize it …

      Federal government policy is almost always the culprit, when you talk about the decline of American life, because such policy is socialistic by its nature. e.g. Tearing up the middles of cities large and small in the ’50’s and ’60’s and beyond to put freeways through, thereby destroying neighborhoods and small businesses forever, and creating instant zones of slums or trash-filled acres. Desegregation busing also sent people fleeing the large and small cities, thereby increasing suburbs and leading to farmers selling their farms for cookie-cutter “subdivisions” designed to have NO small businesses within walking distance, because the Auto Lobby sprinkled enough cash among zoning boards and other politicians to prevent that!

      Liked by 4 people

      • annieoakley says:

        Thousands of cookie cutter homes in hundreds of new subdivisions that were growing corn/onions, sugar beets, soy beans just five years ago. All this in practically my backyard.

        Liked by 2 people

      • sunnydaze says:

        Ausonius, A lot of CT. was always a burb of NYC, even before the Highway system. Trains everyday went to NYC and it was a close and comfortable ride, even from Central CT. Think it was more the Big Grocery Stores and Shopping Malls that wiped out the small ones, combined w/everyone and their brother finally getting a car, so able to easily drive a few miles to shop.

        But I agree w/ much of your post.

        Liked by 1 person

      • I grew up on a small farm in Chantilly, in northern Virginia.
        I remember all the farmers selling their farms and moving away.
        When I was older, I found out that the Fairfax County government had “decided to have an all-urban county by 1990” . They accomplished this by increasing taxes -my Dad later told me that the taxes on our farm Doubled one year, then Tripled (the Doubled amount) the following year. None of the farmers could afford this, they all sold out to land speculators, who in turn sold, over time, to commercial developers.
        I live in south Mississippi. On the rare occasions that I visit Chantilly, there is very, very little that I recognize.
        The farming community that I grew up in has been obliterated.
        It has been replaced by housing developments, shopping centers, and office parks.
        On the radio, Rush Limbaugh’s theme, if the whole song is played, is about visiting home, and ‘my City was gone’.
        I know exactly what they are speaking of, as it happened to me.

        Liked by 2 people

      • dreamguardian007 says:

        “…because the Auto Lobby sprinkled enough cash among zoning boards and other politicians to prevent that!”

        In addition to the payola, at least in my limited experience with local governance: many on the zoning boards, city councils, etc are in – or have financial interest in – various enterprises that are directly impacted by that governing body. It’s a double-edged sword: their knowledge and experience are vital to good governance, but at inherent conflict of interest.


    • sunnydaze says:

      Yup, Frogman. See my post, below. The factory town I Ilived in was in central CT. Not rural by any stretch, but we also had an orchard (apples, cider, mainly) right on the edge of town. Less than a couple/few miles away, really.

      Our local grocer/butcher knew us all very well from the time we were little kids, and he would have his younger helper foot-deliver food to “shut-ins” , etc. All they had to was call and give him the list and the kid would have it at the door w/in a half hour.

      I’m thinking there was a Corner Store every few blocks like that one.

      Liked by 1 person

    • PineoMan says:

      I lived in a very small village town in SE CT where farmers had milk cows, local dairy co, orchards, egg farms, fresh produce all Summer and Fall – local turkey for Thanskgiving – best food of my life – Mom cooked every day – we went to the market (10 miles away) once a month. We were properous and healthy.


  2. ARTHUR says:

    I had a dream last week where I was standing at the checkout line at a grocery store. I looked at a big roll of cash in my right hand and a single loaf of bread in my left and I didn’t know for sure if I had enough money to buy that one loaf of bread. That must be the one fear in everyone’s head right now. It isn’t that there won’t be a supply of food. There will be. But what if your currency becomes so devalued that it won’t purchase enough to sustain you and your family? What if a ten cent loaf of bread back in 1950 will soon cost a hundred dollars sometime in the near future? Then what? Government food rationing stamps-credits? Isn’t that why the Governor in my state won’t let me buy seeds to grow a garden to feed my family? Let’s hope that Trump’s National Economic Security and Recovery Act (NESARA) will work out then. What phase will that be?

    Liked by 1 person

    • jdondet says:

      Well you could try the Soviet method in your dream. You would still have that big wad of cash but no bread at all or anything else for that matter in the store. I stood in line this morning at 5:30 AM at the local Walmart for the chance just to buy toilet paper and paper towels. That scares me hell of a lot more than hyperinflation. Though, I admit hyperinflation causes its own problems also. Still there was food in the stores during the Wiemar Republic but the mark was worthless. Screwed either way it seems!

      Liked by 1 person

      • stripmallgrackle says:

        Reading the posts on how food distribution works in the US, I’ve learned, among other things, that I can’t argue with Aristotle. “The more you know, the more you know you don’t know.” My model of how food gets from the farm or ranch to my table has been rather vague my whole life, yet, my understanding of mass production and economics gave me the sense that I knew how things worked. Sundance disabused me of that assumption.

        If sundance is in the mood, I’d really like to have my mind blown by a detailed description of how federal money gets circulated. His expose on the Senate Foreign Relations Committee vis-a-vis the Bidens and how Senators unlawfully make what amounts to a broker’s commission off it was an eye opener.

        I’m thinking of Deep Throat in All The President’s Men. “Get your notebook out. There’s more. You’re lives may be in danger.”

        I am a student for life, but I don’t have the time to unravel that mess. If sundance has some details on distribution of federal revenues and how the system works, my notebook is out.

        Liked by 2 people

      • oldumb says:

        Walmart in Southern IL doubled their egg prices today.

        Liked by 1 person

        • jdondet says:

          That doesn’t surprise me. They have raised the price on milk and butter here and don’t ask me about what I paid for toilet paper and paper towels at the Walmart here in my town. Question does your Walmart have flour? I haven’t seen any for the last couple of weeks here at the local Walmart.

          Liked by 1 person

          • oldumb says:

            I don’t know about flour, I don’t do much shopping. I was hanging with my wife and talking to the egg/dairy guy. He was pissed.


  3. Guessed says:

    Well, try trading a half a magazine of 5.56 x 45 mm for a loaf of bread. It might work, under the right circumstances.

    Liked by 1 person

  4. jimrockfish says:

    Weird timing. Drove through Blake’s in Tucson for a breakfast burrito today. Hash browns, eggs and bacon. “We are sorry but we are out of hash browns”. Guy at window said they weren’t sure when they would get more.


  5. Guessed says:

    We have seen orders allowing wholesalers to sell their commodities directly to the public (why is such permission required, I wonder?). Maybe farmers should be selling milk in bulk at farmer’s markets where the customers bring their own containers (old gallon milk jugs, rinsed out).

    Like a third world country where the water wagon rolls into town and the people come out with their pails…

    Liked by 1 person

    • annieoakley says:

      Just so you know, it is possible to freeze milk. You can freeze it in the gallon milk jugs but you have to thaw it completely and shake it up so the solids are not separated on the bottom before drinking. I can’t taste the difference. Also you can use reconstituted dry milk to cook with and it won’t alter the taste of the finished product.

      Liked by 1 person

    • oldumb says:

      I used to buy fresh (strained only) milk from a beautiful Amish family here in southern IL, until the government decided to make it illegal. I have not drank any milk since then. The state was looking out for me because I am not smart enough to know what to eat or drink.

      Liked by 1 person

  6. IT Mike says:

    Oops hit enter too soon.
    The oh S moment:

    Most restaurants have used or tossed their perishable food. They are currently closed or at greatly reduced capacity with takeout only.

    What happens to the supply chain when a million restaurants, hotels, sports arenas, and other commercial places that buy from THAT side of the food chain suddenly open in the same week? Yeah, OH Sh@t


  7. sunnydaze says:

    So basically….before the 70’s, there would have been little disruption due to the more local distribution of milk, eggs, etc.

    In the late 50’s- 60’s growing up in a scruffy factory town in the middle of the city, many many people- including my family – had a little “insulated” aluminum box on the front steps that held the milk, eggs, whatever the milkman and others dropped off. This was before big Grocery Stores hit our area. The tiny corner Market/ Butcher and Milkman was IT.

    An Uncle was a Milkman in Florida, of all places. Can’t imagine how well insulated the Milk Boxes needed to be down South!

    Guess the milk was supplied by one of the – then numerous- local dairies. And there would have been no unecessary dumping of milk and other things.

    We really went off the rails when we threw the small farmer aside for Big FARMA (pun intended). And the sad thing is, we’ve KNOWN for 40 or 50 years that we were doing it all wrong, but never corrected it.

    Maybe this will be a catalyst to go back to the better way.

    Liked by 3 people

  8. A Call for Honesty says:

    In the western world the “Nanny State” looms large. One of the most important things parents can do in the life of children is to raise them to become responsible adults. The parents need to set a good example but also to allow children to feel the consequences of irresponsible actions. Little things matter like packing a school lunch.

    When I started school, my mum packed my lunch but soon encouraged me to prepare my own lunch. If I neglected to pack in a lunch I went hungry. If parents do not provide food at home, they need to be confronted by a teacher or principal and given wise counsel about how they can remedy this. What has happened to people with that wonderful title, “breadwinner”?


    • Sharon says:

      “If parents do not provide food at home, they need to be confronted by a teacher or principal and given wise counsel about how they can remedy this.”

      Who does such confronting today will be met by a buzz saw of expectations and accusations.

      For at least a few years, the Oregon school cafeterias have been serving meals all summer to the kids whose parents have absolutely no intention of providing food at home.

      Once the stupid pandemic got under way, and school was cancelled for the rest of the normal school year, they ratcheted up the norm: now meals were provided 3X a day, prepared “to go” – called, cleverly, grab and go. The meals could be picked up by anyone in the family. No need for the children to be present.

      And NOW – now because of the restrictive nature of things – NOW they are serving meals 3X a day – 7 days a week.

      The children are now, for all practical purposes, wards of the state.

      And off course, their parents are still collecting cash benefits, SNAP, WIC, and all the rest – and there are the book bag drives in the summer (to give them all new book bags that their parents will not pay for) and then the jackets/hats/gloves drive in September to clothe them as cooler temperatures approach, and then the Christmasgiftsforchildren drive in November to present them all with new things. That their parents won’t pay for.

      This is not happening right now. This is just the proof of the pudding of what has been happening for decades.

      Liked by 1 person

      • Charlie says:

        You are correct. When these parents come to pick up their children occasionally from school, they are driving much nicer cars than the teacher. Many parents think all learning should be done during school hours and will not help their children with homework or studying for a test. Those same parents are not griping and complaining about being expected to help their children at home during this pandemic or whatever it is going on. Some very well educated, affluent parents are making their displeasure widely known for being expected to help their children or spend time on their assignments because they are ” too busy’. And on top of this mess, curriculum in schools is state driven, meaning that the state decides what and when to teach their “objectives” which might or might not make much sense. Students and teachers are then graded on the state tests, which are not at all achievement tests, they are criterior referenced test. A good teacher might teach for 2 weeks on a topic but miss the one magic question the state thinks students should know, and then teachers’ jobs are threatened and put on the line because 1. ridiculous curriculum, 2. lack of parent support 3. students who have no desire to learn or to work at something and will quickly tell you that 4. administrators who are only interested in their private bonuses they get from the state (min. $10,000) for a certain segment of the student population. 5. low salaries 6. low esteem or respect from the parents , etc. If the states rewarded the administrators for seeing how high students could score on a standardized achievement test, and elementary math curriculum actually taught children basic skills, and if parents supported their students and their teachers, then we might be better off than we are not. I speak the truth from years of experience, long nights of preparing lesson, little money, no respect or support, and exhausting, but with a great love for children and them being taught to want to learn. Sorry for the tirade, but people need to know the situation.

        Liked by 1 person

  9. mandy says:

    Listening to the daily briefing from Gov Ricketts (Nebraska) – forgive me if I’m not exactly right on this, but apparently they’ve instated a waiver of individual labeling for foods/other items from restaurants in the state (was this a Federal idea? I’m not sure). Anyway, you can now request, for example, bread from a restaurant and if that restaurant chooses to sell this way, they can sell you a loaf of bread. Or a pound of butter. A bag of shredded cheese. Even toilet paper by the roll if they so choose. Individual labeling not required at this time.

    Daily presser continues – here’s a link for anyone interested.


  10. Ron Hyatt says:

    ” how’s pizza sales going right now? ” in Georgia, OFF THE CHAIN.


  11. Suzy Jules says:

    Time to suspend all restrictions on supply chain to restaurants for use by grocery chain. Put milk in empty plastic water bottles. Eggs in Tupperware. Feds need to take over the Chinese pork factories get them up and running. Most grocery store meat departments can break carcasses, or have they lost the art of butchery. Maybe call on abortionists to filet steaks. This whole thing is a clusterf**k, that hoodwinked Trump because of those deep staters surrounding him.


  12. Suzy Jules says:

    Time to suspend all restrictions on supply chain to restaurants for use by grocery chain. Put milk in empty plastic water bottles. Eggs in Tupperware. Feds need to take over the Chinese pork factories get them up and running. Most grocery store meat departments can break carcasses, or have they lost the art of butchery. Maybe call on abortionists to filet steaks. This whole thing is a clusterf**k, that hoodwinked Trump because of those deep staters surrounding him.


  13. Mike Lee DelMarcelle says:

    Don’t worry if this keeps up there will be food still available in government food lines. Bernie said they’re great!


  14. RedBallExpress says:

    Dean Foods – the nation’s largest milk distributor recently declared bankruptcy. Every farm voice and media source told the “unvarnished truth” and blamed it on declining milk consumption. Trouble is in total there is still huge volumes of milk consumed.

    The real reason Dean Foods declared bankruptcy is that in March 2007 Dean Foods issued a one time $15 dollar per share bonus to stockholders that was paid for with nearly $2 Billion dollars of borrowed money. Dean Foods board of directors and banks were the primary benefactors. There is a great deal of speculation that Dean Foods pension fund obligations will be abandoned.

    The nation’s largest dairy “co-operative”, Dairy Farmers of America (DFA) has had a close relationship with Dean Foods for years. DFA recently acquired Dean Foods thus giving them a total monopoly of fluid milk procurement and sales in many regions of the U.S. Many observers have warned for several years that this was the strategic end game.

    D.F.A. has very tight connections with the Bush family and despite its name and claim is not a farmer owned cooperative. No one knows what the executive staff earns.

    “The Milkweed” is the source for this information.

    We got rid of 3 more cows today in line with our local co-ops pleading to reduce production. Furthermore milk prices are now far below cost of production. Thinning the national herd will reduce production but it will take years to rebuild.

    Liked by 1 person

    • jeans2nd says:

      Lived among the Amish for 20 years, but there were farmers around as well.
      Early on, the farmer whose field butted up to our front yard switched from milking Holsteins to Angus beef.
      The farmer’s son had taken over, computerized the entire operation, and made lots of money.
      Hopefully you all in the local co-op could find to make it through, or diversify.
      Praying for your, and all of our, collective futures.


  15. jeans2nd says:

    Thinking over this, with this morning’s perfect 20/20 hindsight, you never mentioned the role of the Corrupt Unions.
    The International Brotherhood of Grocery Workers, or whatever they are called, is on CN&N wailing over not being labeled as first-responders. Can strike threats be far behind?
    Red Ball, above, also mentions the role of Corrupted Co-ops.

    Sure seems like a no-win situation. There is a way. Not being a farmer or grocer, not seeing it at present. But someone more knowledge will.


  16. RB says:

    Growing up in a Third World country (which shall remain unidentified) for my parents’ generation milk meant one of two things: powdered or condensed. (Unless, that is, you had or lived next door to someone who had dairy cows– a perk of coming home from the city to visit the folks down on the farm).

    OK, that aside, local delivery systems in the US worked within living memory and they should be possible to restore, especially now that there’s some actual incentive to do so. Prices will go up to cover the cost of the transition, though.


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