The Financial Times reports that a reduction in the milk supply, due to a cold spring and dairy farmers leaving, has led to prices of butter and cream rising 18.7% in the year, according to data from the Office for National Statistics. But despite “record prices” for wholesale cream and butter in recent weeks, the National Farmers Union point out farm-gate prices for milk have continued to fail to keep in step.
BBC online reports that Arla’s CEO Peter Tuborgh said producers “put the brakes on” in 2016, in the wake of previous overproduction of milk and consequently lower prices and Michael Oakes, chairman of the National Farmers Union dairy board, added that UK supply had fallen partly because so many farmers “decided enough was enough during that downturn”. Many farmers have often had to sell milk for less than the cost of producing it and so – understandably – the number of UK dairy producers has fallen.
The National Farmers’ Union said the “constant boom-and-bust dairy market cycle” helped “no-one, most of all farmers” and expressed concern about the lack of strong upward movement in the farm-gate milk price.
Milk buyers are worried about milk volumes falling but, the NFU spokesperson added, “Confidence within dairy farming is at an all-time low [due to] mistrust in the market dynamics and suspicion about how milk buyers are treating their supply base, coupled with the lack of direction on the impact of Brexit on the dairy sector.”
Post-Brexit, will the UK government ensure that ‘ordinary’ farmers receive a fairer proportion of the agricultural payments and turn away from the practice of subsidising offshore companies and rich individuals?
And will the Groceries Code Adjudicator, who places great emphasis on scrutinising supermarkets give more time to food producers and address the issue of unjust farmgate prices?
Posted in Farmgate prices, Food corporates, Food processors, Food producers, Food security, Government, Middlemen, Procurement, Profit margins, Small and medium farms, Supermarkets, Trade
Tagged Brexit, butter, cream, Groceries Code Adjudicator, UK dairy farmers
Pre-empting qualms about the health impacts of dairy products, from Lancashire dairy farmer Tom Rigby’s retweet we note the findings of professor of food chain nutrition Ian Givens and his colleagues from Reading University, Copenhagen University and Wageningen University in the Netherlands. They analysed 29 studies involving 938,465 participants from around the world undertaken over the last 35 years, including five done in the UK. “No associations were found for total (high-fat/low-fat) dairy and milk with the health outcomes of mortality, CHD or CVD,” they said. In fact, they added, fermented dairy products may potentially slightly lower the risk of having a heart attack or stroke.
A new hazard is being added to the long-term imposition of payments below the cost of production
As dairy farms close, due to unviable prices, the distances between farms is growing and providing a tanker to collect their milk is too expensive. The East Anglian Times reports that Muller has announced that it will close its Chadwell Heath depot in London and no longer collect the milk from 18 dairy farms across Norfolk, Suffolk. Essex and Kent. This follows the closure of two Scottish plants by Muller last year.
The 18 dairy farms who are to have their milk supply contracts cancelled by Muller have been given 12 months from the end of March to find new buyers for their milk at a price that offers them a viable future – one commentator adds gloomily:
“Given current trends it won’t be long before it will be possible to drive from Dover to York without seeing a single dairy cow”.
A brief history for visiting readers from other countries (left, Jan-May)
The number of dairy farms across the UK has fallen dramatically since the Milk Marketing Board (MMB) was abolished in I993 by a Conservative government that saw it as “anti-competitive”. In the period 2013-2016 alone, Business Matters reports that 1022 farms have closed. The MMB was created by an act of Parliament in the 1930s to ensure that all UK dairy farmers were paid the same price for their milk and that they shared milk collection charges regardless of where they farmed. This was to stop dairy farmers being bullied by over-powerful dairy companies who were establishing virtual regional monopolies.
Since the MMB was broken up, farmers have had to negotiate terms with processors individually and this ‘free trade’ has benefitted the milk processing companies and now the average price UK dairy farmers received for their milk last year was lower than it was when the MMB was abolished 24 years ago – and that is the main reason that the number of dairy herds in the UK has collapsed.
Could co-operative retailers sell good quality food produced on their former farms (now owned by the Wellcome Trust) as MEP Molly Scott Cato advocated two years before the sale?
With foreboding in 2012, she saw the depressing comments from the Co-operative Group that the Co-operative Farms are a ‘non-core’ part of the business, and that attachment to them is sentimental, as indicating that the current generation of co-operative managers shared a short-sightedness about their role in providing customers with access to a reliable source of ‘good food’.
In 2010, Molly co-wrote a paper called ‘The co-operative path to food security‘. In it, she pointed to the increasing volatility of global food prices as speculators moved their gambling activities from financial products to commodities markets, saying, “It never was enough for me that the food I bought in my local Co-op was ethical and fairly-traded; as a green economist I also wanted it to be as local as possible”. She continued:
Supermarkets that sell the same corporate products as the rest have lost all but the merest token of a co-operative identity
“The Co-operative shops have not been as successful in this regard as I would like because of their centralised distribution system, but my own Midcounties Co-op has been building up its Local Harvest offer in recent years and I’m surely not the only customer who looks to see whether the vegetables on the shelves have been grown on the Co-operative Farms”.
Now that is no longer an option, the writer wonders if an agreement could be made with local Wellcome (former Co-op) farms to provide local food in Co-op stores – and offer some organic options for those who want to avoid food with pesticide residues?
Posted in Food corporates, organic farming, Procurement, Speculation, Supermarkets, Trade
Tagged -operative Group, Environment, Ethics. global food prices, Local Harvest, MEP Molly Scott Cato, Midcounties Co-op, Organic food, speculation food futures