Milk Prices

[Colonial]

This is why I have taken a stand of buying as little as humanely possible at the supermarket.

I pay roughly double the supermarket asking price for milk. But it's proper milk that actually tastes like milk. Organic. Sold by the guy that milks the cows.

Farmers markets and farm gates are the only way to buy produce these days.

Dishwasher powder and toilet paper. About all the supermarket is good for.

[The Don of Croy]

Colonial said:

This is why I have taken a stand of buying as little as humanely possible at the supermarket.

I pay roughly double the supermarket asking price for milk. But it's proper milk that actually tastes like milk. Organic. Sold by the guy that milks the cows.

Farmers markets and farm gates are the only way to buy produce these days.

Dishwasher powder and toilet paper. About all the supermarket is good for.

Fair point.

In our village we have four organic shops dotted around, plus the village shop (Spar type), so you can get a fair choice of produce. Trouble is, not every shop has what you want at a price you are happy to pay...nor do they have a convenient pharmacy or cafe attached...nor bus stops...

Interesting piece on dairy industry here;

http://www.fwi.co.uk/Articles/30/10/2009/118506/39...

- but only up to 2009. Interesting that there have been large farmer co-ops involved.

[Mark Benson]

Murph7355 said:

Mark Benson said:

From 2009;

61p - cost to farmer to produce four pints
58p - paid to farmer by processor
£1.07 - paid to processor by supermarket
£1.45 - cost to customer to buy four pints from supermarket

Farmer 3p loss
Supermarket 38p profit.

Source: DairyCo

Those figures don't include the costs of the processor and the supermarket, so unless those figures exist from DairyCo and weren't published, the only figure that looks definitely mathematically correct is the farmer's loss.

As others have said, I cannot see why farmers don't force better contracts. Perhaps by working more cooperatively (fight the supermarkets at their own game using the same methods).

I also have no idea what "small" is in relation to production such that the supermarkets can strong arm. I would have thought if a farmer were small enough, there would be other methods of selling their produce without getting screwed over by a supermarket. There are two middle men in the chain you noted, both of whom are assumed to be taking a healthy chunk of profit.

Cut them out and offer the product markedly cheaper and offer it locally. If you can undercut the supermarkets in your area by 30+% I would imagine product would walk out of the door. Especially if the whole "local" angle was played and perhaps other quality products were offered...

If you can't, maybe the links in the chain aren't making the profit you assume?

I agree the supermarket 'profit' doesn't take into account their costs, but do you seriously believe it costs a supermarket 38p to transport a litre bottle from the processor to the shelf and keep it cold for a couple of days? Hard to believe the vast majority of that 38p is not profit, given the scale and efficiency of modern retail distribution.

The problem for farmers, as has been pointed out several times in this thread is that only the supermarkets can buy milk in sufficient quantities these days - milk is useless after 48 hours and a farmer need the guarantee of a buyer in order to make the long term investment in his cattle.

Many small farmers do sell locally, in fact I know of one farm which moved from intensive pig rearing for the supermarkets to free range rare-breed production, selling through the local quality butchers and to restaurants, their profits per pig went from -£3 to £25 per pig. But there is a very limited market for the meat produced this way, it's better quality but more expensive and therefore the outlets are fewer - most pig farmers still have to rear intensively to satisfy demand and intensive rearing means there is only one outlet for the product.

Additionally, there are very few small farmers left, 30 years ago a 300 acre mixed arable/meat or dairy farm could just about support a family - they have all but gone and now it's far more likely a farm is 1000 acres plus. We can now easily import cheap produce from the EU and beyond, so farmers have to cut costs to survive, the only viable market for most is the big supermarkets. Many family run farms have sold up and the industry is now much more biased towards agribusiness, where a 'farm' might consist of several smaller farms amalgamated into one. The larger the farm, the larger the customer needs to be for them to sell to.

And there is no local distribution network for milk in most of the country these days and a farmer is not necessarily going to make a good milk retailer. Maybe some of them could group together and become 'Farmer's Dairy Co.', but that requires investment and business planning, most farmers I know are too busy trying to run their farming business to start up another one on the side.

It's a sorry state of affairs, and you'll find that many farmers are diversifying (look at the number of farm shops appearing) but there is only so much you can do as a small businessman when your primary business means you already work long hours and are tied to the needs of your animals or crops.

If the nation really cared about it's food supply (as I believe it should, especially with the Eurozone looking so precarious and imports becoming ever more expensive) we would value farmers more and demand a fairer deal for them - the supermarkets have manipulated the industry to suit their needs but have not reciprocated by keeping prices to a level that can support that industry in this country.

[Ozzie Osmond]

hidetheelephants said:

Got evidence of that?

Yes. Look at land prices. It's blatantly obvious they aren't driven by returns from farming - they are driven by the lifestyle choice of many owners. This skews the whole economics of food production in UK.

If farmers don't like farming they should find another job. That's pretty much the way it worked out for coal miners, ship builders, steel makers....

[1point7bar]

Ozzie Osmond said:

Yes. Look at land prices. It's blatantly obvious they aren't driven by returns from farming - they are driven by the lifestyle choice of many owners. This skews the whole economics of food production in UK.

If farmers don't like farming they should find another job. That's pretty much the way it worked out for coal miners, ship builders, steel makers....

You are also in favour of a centrally planned economy are you not?

[eccles]

Ozzie Osmond said:

If farmers don't like farming they should find another job. That's pretty much the way it worked out for coal miners, ship builders, steel makers....

What a strange statement. I suspect the vast majority of coal miners etc would still be doing their jobs if they had the choice.

[Mark Benson]

Ozzie Osmond said:

hidetheelephants said:

Got evidence of that?

Yes. Look at land prices. It's blatantly obvious they aren't driven by returns from farming - they are driven by the lifestyle choice of many owners. This skews the whole economics of food production in UK.

A few gentlemen farmers farting about on a few thousand acres of land has not had any significant affect on the UK's farming industry.

[The Don of Croy]

Ozzie Osmond said:

Yes. Look at land prices. It's blatantly obvious they aren't driven by returns from farming - they are driven by the lifestyle choice of many owners. This skews the whole economics of food production in UK.

If farmers don't like farming they should find another job. That's pretty much the way it worked out for coal miners, ship builders, steel makers....

I think you're straying into the planning argument here, or you're overstating the influence of hobby farmers. Good land has always commanded a premium - for centuries. Whether that's 'good for farming' or 'good for housing' depends on the local planning office, but the principal is the same.

Farming is a cyclical emotive industry - prone to feast and famine, but good to look at, too (except when they are burning the national herd). In fact I think the badger issue is a microcosm of the whole industry - people like badgers, badgers get protection, badgers might just be spreading TB to both farms and town, badgers compete with other fauna for food and habitat, but you cannot touch badgers, badger population becomes unsustainable...everyone agrees there is a problem, but nobody can find a solution.

[Trommel]

Ozzie Osmond said:

Yes. Look at land prices. It's blatantly obvious they aren't driven by returns from farming - they are driven by the lifestyle choice of many owners. This skews the whole economics of food production in UK.

Out of all the stupid things you have posted I think that's right up there.

[Murph7355]

Mark Benson said:

...<post>...

Thanks MB..

Fundamentally I still don't get why anyone would sell every unit of what they do at a loss with no way within that business of off setting it. It simply cannot be sustainable, so there must be other forces at work....

As for when the Eurozone issues force prices up, bring it on. I would have thought those in the industry here must be itching for it to happen so the shoe can be put on the other foot.

(Isn't there a farmer's union? Rather than lobby the govt about how bad the supermarkets are, and about Euro subsidies, wouldn't they be better corralling their members to fight back at the supermarkets?).

[Sticks.]

Murph7355 said:

Fundamentally I still don't get why anyone would sell every unit of what they do at a loss with no way within that business of off setting it. It simply cannot be sustainable, so there must be other forces at work....

Is it not that the buyer can vary the price within the contract period? Thought that was what was said on the news yesterday.

[XDA]

Murph7355 said:

Fundamentally I still don't get why anyone would sell every unit of what they do at a loss with no way within that business of off setting it. It simply cannot be sustainable, so there must be other forces at work....

It isn't sustainable, which is why we have fewer diay farms every year.

When you have 10,000-20,000 litres of milk a day to get to market, you have no option but to sell it at a loss. Who else can process that amount of milk 365 days a year?

While milk makes a loss, there's still profits made on crops, sheep, lambs and beef etc.

[TimJMS]

Amateurish said:

+1

My local dairy farmer recently gave up on milk and got into free range chickens instead. And apparently got a £60k grant to do it.

Farmers need to be flexible and diversify. If their business can only run at a loss, then they need to change the way they do business.

I've become a conservationist. You can blame the RSPB for that. 35% of my acreage now produces nothing you can buy, and yet you pay for it. All policies implemented back when Europe had some money. Rigourously and zealously policed by DEFRA.

[BJG1]

mat13 said:

What else is a 50 year old dairy farmer going to do?

Stop producing milk and be better off?

[Ozzie Osmond]

Trommel said:

Ozzie Osmond said:

Yes. Look at land prices. It's blatantly obvious they aren't driven by returns from farming - they are driven by the lifestyle choice of many owners. This skews the whole economics of food production in UK.

Out of all the stupid things you have posted I think that's right up there.

Tell me you own a farm and I might even pay attention. Until then I suggest you keep it shut and try to understand the world around you. In the meantime, click the link and begin your learning.

http://www.bigpictureagriculture.com/2011/06/compa...

[Murph7355]

XDA said:

It isn't sustainable, which is why we have fewer diay farms every year.

When you have 10,000-20,000 litres of milk a day to get to market, you have no option but to sell it at a loss. Who else can process that amount of milk 365 days a year?

While milk makes a loss, there's still profits made on crops, sheep, lambs and beef etc.

Maybe the problem is building a business model that is dependent on those kinds of volumes? 20k litres a day sounds like an awful lot for just one farm?

Also, ref supermarket profits (MB's post), how much of their stock gets poured away each day?

[Trommel]

Ozzie Osmond said:

Tell me you own a farm and I might even pay attention. Until then I suggest you keep it shut and try to understand the world around you. In the meantime, click the link and begin your learning.

http://www.bigpictureagriculture.com/2011/06/compa...

I own agricultural land and am from a farming background.

Your link, as expected, does not demonstrate that UK agricultural land prices are driven by "lifestyle choices".

You are an idiot.

[Mark Benson]

Murph7355 said:

Thanks MB..

Fundamentally I still don't get why anyone would sell every unit of what they do at a loss with no way within that business of off setting it. It simply cannot be sustainable, so there must be other forces at work....

As for when the Eurozone issues force prices up, bring it on. I would have thought those in the industry here must be itching for it to happen so the shoe can be put on the other foot.

(Isn't there a farmer's union? Rather than lobby the govt about how bad the supermarkets are, and about Euro subsidies, wouldn't they be better corralling their members to fight back at the supermarkets?).

Some diversify, some sell up, some soldier on hoping things will improve.
The NFU is taking action to help farmers by demanding a better price - click

But the big problem as I understand it (I'm not a farmer, but I've been around farming all my life in one way or another) is that setting commodity prices as a group sails very close to the wind in terms of being a cartel, which is illegal under EU law (that's one of the reasons the MMB was dissolved).

There's also the fear - as said before you can't just turn cows off but you can import milk from the continent. In a stand off the farmers aren't likely to beat the supermarkets and very quickly livelihoods would be threatened. What happens though is each year fewer and fewer farmers decide not to be dairy farmers (and it's not confined to dairy, farming as a whole is constantly under pressure from the supermarkets who can easily buy abroad if they need to), reducing our ability to be self-sufficient should import prices increase too much - once a dairy farm is gone and the buildings and land sold off, it's not easy to reinstate.

[XDA]

BJG1 said:

Stop producing milk and be better off?

And he does what with his 100-500 pedigree herd (which took 20-60 years to build), his farm/land, his employee's and equipment? Just sell it all off to the highest bidder?

If only it was that simple...

Murph7355 said:

Maybe the problem is building a business model that is dependent on those kinds of volumes? 20k litres a day sounds like an awful lot for just one farm?

Also, ref supermarket profits (MB's post), how much of their stock gets poured away each day?

An average yield per cow is about 27.4 litres/day. 27 multiplied by 500 (cows) is 13,500 lites a day....

20k litres a day is achivable with a high yielding/very large herd.

Unless you are producing large volumes of milk, its not worth your while.

[PugwasHDJ80]

How do you stop a cow from producing milk instantly?

only way is to destroy your herd (which can't be eaten as it will usually be too old).

Then what happens when we need them to start producing again? al the cows are dead and the farmers are out of business.

we NEED food, destroying a skillset and an asset base because its not currently fucntioning is a very bad idea.

Farmers are strating to get a bit peeved because we don't seem to value their produce. A pint of beer is more expensive, but takes far less to produce, and has far less demand.