A fair deal? Rock-bottom milk prices
"We thought that we would arrange to have our milk delivered from a local milkman, but were disappointed to find that the only milk delivery services that still operate in our area are national conglomerates that don’t guarantee your milk is local or fairly paid for"
Disputes between farmers and retailers over the price of milk have been fairly commonplace over the past decade, but this year proceedings have taken an alarming turn, after it was revealed that dairy farmers are often being paid less for a litre of milk than it costs to produce
The “farm gate” price of milk that farmers are paid has dropped by 25% in the past year, down to an average of 23.66p per litre. When you take into consideration that the dairy industry estimate that it costs farmers 30p per litre to produce milk, the problem becomes quite clear. In a bizarre paradox, the volume of milk sold has risen by 11% since 2007, whilst the value of milk sold has dropped 9% since 2009.
So why has the price dropped so low? Most of the blame has been placed on supermarkets, particularly the “big four” retailers who have engaged in a price war over milk since Aldi and Lidl have undercut the majority of their prices. However, there are many other factors at play, and it would be an oversimplification of the issue to place the blame entirely on the heads of the grocers. Whilst only about 10% of liquid milk is sold to supermarkets with the milk producer paid on a cost of production basis, global markets have also pushed milk prices downwards, partly due to a lapse in demand from Russian and Chinese consumers. These price plunges have been enough to push a dairy farmer out of business every day. There are only about 42 milk producers left in Oxfordshire.
OX spoke to Isobel Bretherton from the National Farmers’ Union to get her perspective on the issue:
“It’s not easy for the consumer to tell whether a supermarket selling milk has a ‘cost of production’ pricing model in place for its dedicated dairy suppliers – unless it has a statement on its website or at the point of sale. Supermarkets with dedicated supply arrangements with producers paid on a cost of production model include M&S, Waitrose, Tesco, Sainsbury’s and Co-Op. The NFU cannot tell supermarkets what price to charge for milk as that would be anti-competitive, but £1 for four pints does not seem enough. We would hope that the costs of any discounting are being met by the retailer, and we’re concerned at any retailer devaluing the price of milk because this devalues the product in the eyes of the consumer. We’re welcoming moves by any supermarkets that are now developing milk/cheese ranges where extra benefits are returned to the dairy farmer, and retailers are gradually responding to increasing pressure from consumers to act responsibly towards dairy farmers.”
So what can individuals like you and I do to help British farmers? In the OX office, we thought that we would arrange to have our milk delivered from a local milkman, but were disappointed to find that the only milk delivery services that still operate in our area are national conglomerates that don’t guarantee your milk is local or fairly paid for. The same is true of an increasing number of UK postcodes: the role of the milkman has been lost, like so many others, to the bargain-basement prices of the supermarkets. We spoke to Richard Smith, owner of Daylesford Organic Farm in Gloucestershire, to get his opinion on the decline of local milk:
“When I was a kid there were milkmen in the village who delivered milk every day. They charged a premium for that product, and supermarkets have used milk as a loss leader to draw people into their shops, because obviously milk is one of the great staples in this country. The supermarkets have then got into price wars amongst themselves, which has led to the poor farmers being paid very little for it. The demise of the milkman came about because people can buy milk far more cheaply in the supermarkets than they could have it delivered to their home.”
So what can we do to help? The answer lies in putting pressure on retailers to treat farmers fairly. The NFU recommends the following:
“Buy more British dairy products, especially by choosing British cheeses, yoghurts and butter. If you don't see these British products clearly on the shelves then ask for them. Be informed and speak to a shop manager if you are unsure about the products you are buying”.
In such a volatile climate for global milk prices, British dairy farmers need all the help they can to stay afloat.
As farming provides the base products for so many other sectors, it acts as a backbone of hundreds of British industries, and it’s in everyone’s interest to make sure our dairy farmers are fairly remunerated. Keep buying British, and why not sign a petition to introduce minimum prices?
For further information, visit the National Farmers’ Union website at nfuonline.com