The U.S. dairy sector entered 2021 still in flux following the extraordinary events brought about by the COVID-19 pandemic. As the virus mutated into its variants, the economic shock stemming from the first year of reacting to the pandemic reverberated throughout 2021. There were labor issues, logistical challenges and rising inflation. COVID cases and quarantine requirements caused labor deficiencies in dairy manufacturing plants, where some plants had to forego production runs due to inadequate staffing. The labor issues factored in the difficulties in the trucking industry and at the ports, which contributed to the rising freight rates and logistical challenges. The congested dynamics at the ports and in transit hindered efforts by dairy exporters. Rising costs of inputs countered the increase in milk and dairy product prices, impacting producer and manufacturer margins.
Thus, doing business in 2021 was complicated and challenging. Yet in the face of uncertainty and turmoil in the economy, the dairy industry succeeded in providing ample dairy products to domestic and world markets. The dairy farm sector showed productivity growth in 2021—milk production of 226.31 billion pounds increased by 1.6 percent following a remarkable 1.9 percent growth in 2020 (percentages adjusted for leap year).
