How a Stuck Ship Created Maine’s Chocolate Milk Misery

Remember when the Suez Canal was blocked last year by a stuck ship?

One result was some chocolate milk misery.

Maine’s Chocolate Milk Misery

Located near the northern tip of Maine, close to Canada, the Houlton Farms Dairy reputedly makes spectacular chocolate milk. One 38-year-old who has been drinking it since she was a child now buys it weekly for her kids. So, when she found an empty shelf where their gallon jugs should have been, despair set in.

Houlton Farms Chocolate Milk:

Some would say the reason was the supply chain or the port pile up.

However, when we look closely, we see much more. To start, the cows were fine. Living at a nearby farm. their milk was readily available. But the unique chocolate milk power that created perfect color and creaminess was not. Every three months, 40 bags of chocolate milk powder arrive at the Dairy. The ship that got stuck was carrying two container boxes with milk powder ingredients, perhaps the cocoa from Brazil or West Africa. Then, making the situation worse, the people who send the emulsifiers backed out of their contract.

Meanwhile, the demand side added to their problems. With schools that had just reopened getting what was available for students’ lunches, there was little left for supermarkets. Predictably, because the small amount sent to supermarkets was swooped up instantly, demand accelerated. After one person bought 12 half gallon containers, one store had to impose a limit of one per person.

Our story, for now though, has a happy ending.

The dairy just reported that it expects to get its powder this week. With the cane sugar, Vitamins A and D, and 2 percent milk in stock, they need only an hour and a half to pasteurize and package their chocolate milk.

Our Bottom Line: Supply

Economists define supply as the amount that producers are willing and able to create at different prices. As you would expect, the supply curve slopes upward. When price rises, suppliers, hoping for more profit, increase production. With the current situation, instead, the supply curve has moved upward and to the left. Reflecting the complexities and escalating cost of production, businesses like Houlton Farms have had to produce less.

A decrease in supply and an increase in demand usually leads to an increase in price. However, I am not sure if that happened to Houlton Farms Chocolate Milk:

Returning to where we began, the stuck ship was only a part of the chocolate milk misery. Most seemingly simple products depend on a global supply chain. When we become aware of its content, that means something is wrong. Otherwise, it all sounds so simple.

My sources and more: Thanks to The Washington Post for the original chocolate milk story.