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Dairy Suppliers Constrained by Shortage of Packaging

11/14/2023

A major supplier of gable-top cartons for milk and other dairy products has acknowledged a supply problem.  This in turn has impacted dairies especially those supplying schools that serve milk in 4- and 8-ounce cartons.

 

The cause of the supply shortage attributed to one manufacturer with a large volume of production remains obscure.  The company concerned has been less than transparent in either explaining the reason for the shortage or the action to be taken to restore supplies or to provide a date for resolution.

 

In the interim, competitors of the company have increased production but as with all packaging supply situations there are limitations to expansion since most plants operate at high capacity to constrain fixed costs of production. 

 

The situation facing dairies is reminiscent of the problem confronting the egg industry at the outbreak of COVID in 2020 when demand for egg liquids fell sharply.  This resulted in diversion of eggs to the shell market that would otherwise have been broken. Sales were constrained by the availability of egg packs especially 12 and 18-egg sizes.  The major suppliers buckled down, rationalized distribution and increased output through extra shifts and tweaking their plants to maximize production.

 

It’s not yet clear whether the shortage of milk cartons is regional or the extent of the inability of the implicated manufacturer to supply requirements.  At the very least the problem appears to be bicoastal with politicians in both New York state and California raising questions and becoming involved on behalf of their constituencies.