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The price of milk – does everyone win but the farmer?

Milk splashing

TV, radio and social media have been alive with the sound of dairy farmers battling to earn a fair milk price. The National Farmers Union’s Tom Hind puts forward their case and explains how the fight for milk affects you.

The current #sosdairy campaign has put dairy farming right in the public spotlight, with dairy farmers and their supporters demonstrating outside supermarkets, processing factories and dairy distribution depots over the price of milk.

It’s taken hold of the Twittersphere and drawn public condemnation at the practices of supermarkets and dairies to the detriment of dairy farmers. And ultimately, consumers are at the heart of everything the dairy industry does.

Have you got milk?

The response from the general public to the recent milk price crisis has been phenomenal with many hundreds of people joining farmers at protests or writing to supermarkets and dairies asking what they are doing to look after dairy farmers. And celebrities including Hugh Fearnley-Whittingstall and Jamie Oliver have thrown their weight behind the campaign too.

Milk is iconic. Almost all of us buy at least a pint of milk once a week. Because of that, it’s also highly competitive, with supermarkets waging war on milk prices to ensure we perceive them as offering a better deal than their rivals. The contracts to supply supermarkets are vast and the main dairy companies compete aggressively to maintain and gain milk volume in order to grow their businesses and make a profit.

No-one can afford to take milk for granted. It’s a fresh product that can’t readily be imported. It has to be produced all the year round and to strict hygiene and animal welfare standards. The sums that need to be invested to ensure a dairy farm can maintain high standards and be efficient are significant.

What’s more, cows need to be fed a healthy, and sometimes specialised, diet and most dairy farmers are facing the effects of rising feed costs because of droughts in major grain producing parts of the world. So the price cuts that some dairies recently announced are seen by many farmers as the proverbial straw to break the camel’s back.

Supermarkets promise to pay more for milk

Some supermarkets have been doing the right thing by agreeing to pay prices that reflect production costs to the dairy farmers who supply them. Marks & Spencer, Waitrose, Tesco and Sainsbury’s all have these arrangements in place for liquid milk. In recent days, the Co-operative, Morrisons and Asda have made similar commitments.

But there’s more to do to get a fair pricing model for cheese, yoghurt and other dairy products.

The problems don’t just lie at the door of supermarkets either. Another major problem is the way that dairies buy milk from farmers. For dairy, every farmer has a contract to supply milk. Nearly all of those require farmers to sell exclusively to that processor for a minimum of 12 months. Yet the dairy processor retains absolute discretion and power in setting that milk price, and they can change these prices at will and with no notice. Does that sound fair to you?

That’s why the government’s been helping to broker agreement on a code of practice for dairy contracts to eliminate bad practises and promote good ones. At the NFU, we think this is a step in the right direction to help create a long-term framework for dairy farmers, but it doesn’t help the short-term payment problem.

The future for British dairy farmers is still bright. Now they, together with dairy companies and retailers, all have to work together. We can have more high-quality produce, more diverse and affordable milk and dairy products that excite you, the consumer.

This is the long-term strategy that we think will help ensure our dairy industry is a bit less dependent and vulnerable in such a competitive and volatile market place. And it will help to really deliver what consumers want; great British milk.

Do you think farmers should have more control over the price for milk so that they can get a fairer price? And do you think it’s right that a bottle of water is more expensive than milk?

Which? Conversation provides guest spots to external contributors. This is from Tom Hind, Director of Corporate Affairs at the National Farmers Union – all opinions expressed here are their own, not necessarily those of Which?

Comments
Member

There is no doubt the Farmer loses out – Generally they are small companies that are oppressed by the large dairy companies to keep the price below the economic price – The only reason the dairy companies get away with it is because the Tories support greed – punish the poor – The only reason the Tories are “reacting” is because the Farmers are in general richer Tory Voters. If they were not the Tories would be putting out that farmers are greedy self serving self centred left wing activists. The truth doesn’t matter – it is PR that matters – Which is why the ConDems are heading for a disaster,

Member
Phil says:
26 July 2012

Private Eye have been covering this issue for years during which time thousands of dairy farms have closed. It’s sad that it’s needed direct action to bring the matter into the wider media.

Member
Vinnie says:
26 July 2012

Why not farmers setup & run their own cooperative dairies across the country and teach lesson to dairies? It will provide them full control on their own matter. They can set their own price.

Member
Phil says:
26 July 2012

There is one, First Milk, but like it’s predecessor that folded in 2009 it’s not big enough to have any effect on prices.

Member

I think supermarkets have far too much power when it comes to pricing. Their uncontrolled market dominance allows them to hugely exploit all farmers, not just dairy farmers. Surely lots of people would be happy to pay a little bit more for milk to avoid us having to import it from abroad once our own industry collapses? I agree with the Archbishop of Wales on his comments about fairtrade beginning at home. We definitely shouldn’t take milk for granted! It’s currently around half the price of coca-cola – which doesn’t seem fair at all when you compare how each are produced.

Member

I think the government should set a minimum price that the supermarkets have to pay the farmer.
I’d be happy to pay more for the produce I buy, especially milk if it was sourced from Britain and even better locally.

Member
Phil says:
26 July 2012

Like the old Milk Marketing Board used to do? This was abolished in 1994 allegedly because it contravened EU competition rules. I think government intervention to set prices would do so too.

Member

Congratulations Lidl, now let’s see more supermarkets following suit. http://www.express.co.uk/posts/view/335076/Now-Lidl-helps-out-struggling-dairy-farmers/

Member

I think that the 2p extra by Lidl and Co-op from 1/8/12 is not enough considering there was an additional price reduction just a short while ago, this 2p support is just not enough!