Dairy Farmers are not 'milking it'

kabayiri

http://www.bbc.co.uk/news/uk-33844317

It's clearly tough times for many dairy farmers. It's actually been tough for quite a while.

Stories of economic struggles like this will come and go,
but there is a deeper process of change going on (info courtesy of The Eye).

Dairy farming has been going through a process of technological revolution.

Output of milk per cow has gone from 5,500 litres of milk to 7,500 litres of milk in just a decade.

Why? In a word technology.

Robot milking machines which let the cows decide when to be milked.

Machines which monitor the milk quality of every single cow and feed back adjustments to their diet automatically to ensure the cow is performing in an optimal capacity.

Sounds an ideal solution then...

Trouble is, at £120K a pop, only the bigger dairy producers could entertain such an investment; especially when milk prices are controlled by the major supermarkets.

Does it really matter if we see many of the small suppliers going to the wall?

Could small local providers survive by tapping into niche local markets?

The times they are a changin'.

michaels

No doubt all true but I thought the short term problem was continental farmers banned by sanctions from exporting to Russia dumping their surplus at marginal cost on any market that will take it, like the uk.

Of course this is great news short term for the monopsony buyers and the consumer but if long term it results in less supply and no local supply then it will mean higher prices and a worse balance of trade.

SailorSam

What i can't quite understand when you see the farmers going into supermarkets and taking the milk off the shelves is, what good is it doing ?
When i first saw them i thought they were stealing it and pouring it down the drain. But then realised they're buying it. So they're losing money, and some are going out of business 'cos they're only paid 25p a ltr, but then go into the same supermarket and buy it back at 50p a ltr. That isn't harming the supermarket 'cos they're making their sale, it seems to me only harming the farmers themselves by having to pay out money they haven't got.

HAMISH_MCTAVISH

SailorSam wrote: »

What i can't quite understand when you see the farmers going into supermarkets and taking the milk off the shelves is, what good is it doing ?
When i first saw them i thought they were stealing it and pouring it down the drain. But then realised they're buying it. So they're losing money, and some are going out of business 'cos they're only paid 25p a ltr, but then go into the same supermarket and buy it back at 50p a ltr. That isn't harming the supermarket 'cos they're making their sale, it seems to me only harming the farmers themselves by having to pay out money they haven't got.

It's buying national publicity for their cause, and it's doing it very cheaply.

Photos of the cow in the milk aisle were all over the media and accompanied by stories that were broadly sympathetic to their plight.

For a few hundred quid spent buying milk, that's a bargain.

antrobus

michaels wrote: »

No doubt all true but I thought the short term problem was continental farmers banned by sanctions from exporting to Russia dumping their surplus at marginal cost on any market that will take it, like the uk.....

On a point of order.

There are no such EU sanctions preventing farmers from exporting to Russia. It's the Russians who have imposed an embargo on food imports from the EU.

michaels wrote: »

...Of course this is great news short term for the monopsony buyers and the consumer but if long term it results in less supply and no local supply then it will mean higher prices and a worse balance of trade.

It's more a straightforward case of supply and demand; demand has fallen, supply has increased due to the abolition of milk quotas, the price is only going to go one way.

michaels

antrobus wrote: »

On a point of order.

There are no such EU sanctions preventing farmers from exporting to Russia. It's the Russians who have imposed an embargo on food imports from the EU.



It's more a straightforward case of supply and demand; demand has fallen, supply has increased due to the abolition of milk quotas, the price is only going to go one way.

It will be easy enough to test this by seeing what retail prices are in a few years time if the retaliatory sanctions have been dropped.

kabayiri

It's interesting that no response has yet put forward the 'fair value' argument. Is there a concept of a fair price for milk when supermarkets control the price?

On a holistic level, I read elsewhere that 70% of medical treatment can be attributed to lifestyle or pre-existing conditions.

Clearly, there is a massive potential amount of money to be saved if we adjust our lifestyle.

Some would argue that diet and food is a big part of this.

So, not on a moral but economic level, isn't there an argument for valuing our core food products more? Is a pound for 4 litres of milk actually too cheap ?

Personally, I steer towards valuing sustainability in an industry like agriculture. As soon as I tell myself this, I then worry about abuse of subsidy. Agriculture is littered with this too.

princeofpounds

All this has little to do with Russia.


World milk prices have been collapsing (or some might say returning to normal) for some time


https://www.globaldairytrade.info/en/product-results/whole-milk-powder/


Milk, because it can be made into powder, is a global commodity. As long as the Russians don't stop drinking milk altogether, they will get it from other sources and global demand will not be affected much (although there will be inefficient transport arrangements).


This is much more about China. And it's not even so much about the Chinese slowdown we have all heard about, although that won't have helped.


China had a structural undersupply of milk for many years, and their rising wealth allowed them to import milk from all over the world, keeping demand elsewhere high.


Supply has now caught up. And so milk prices head south.


Supermarkets hard bargaining doesn't help, but they are not the real reason either.

paddyrg

Price expectations have been skewed, too.

4 pints of milk - £1
500ml bottled water - £1
Handful of coffee beans and hot water - £3

antrobus

michaels wrote: »

It will be easy enough to test this by seeing what retail prices are in a few years time if the retaliatory sanctions have been dropped.

Farmers are more concerned with wholesale prices. But clearly, the Russian embargo has led to a the fall in the demand for EU milk.

antrobus

princeofpounds wrote: »

All this has little to do with Russia.....

It has something to do with Russia. You have to factor in the CAP. The EU has quite high tarrifs on dairy products, so it operates as a closed market in many respects, particularly for raw milk. So if a major export market such as Russia suddenly becomes closed, it will and has had an effect on EU prices.