Milk Prices

[king arthur]

Amateurish said:

I just checked, it's 44p a litre at Asda.

You mean per pint surely?

[Mark Benson]

wormburner said:

Is there a good reason why the farmers aren't teaming-up, OPEC style and starting to dictate supply?

Anti-competition reasons?

If they refuse to sell to one of the big 4 for less than X, and mean it, then that supermarket has a major issue on their hands. Is importing milk a realistic option for a supermarket?

I believe there are EU rules against 'cartels' meaning that a group of farmers getting together and setting a price they can make a profit on is 'anti-competitive' in the ivory towers of the EU.....

[anonymous-user]

Pints said:

So he's getting 95p selling to you, rather than 50p if he sold it to ASDA.

Less the cost of treating & bottling it rather than flirting it off on a tanker.
Isn't it illegal to sell farm gate/unpasteurised milk ?

I remember the old days buying warm milk straight from the cow.

There was a tv prog on a while ago about supersizing dairy farms, shove all the cows in a round shed, keep them happy they never see a field in their life, I asume they just feed them chemicals which you then drink.

Saying that if it ain't happy it wouldn't produce milk would it ?

[Murph7355]

[quote=Mark Benson]
...
If it costs a farmer around 29p to produce a litre of milk which Tescos sell for 49p, then the vast majority of profit must have been taken by Tescos - there is no way milk costs 20p/litre to process and transport...quote]
I have no idea on the actual costs. But as a layman I can easily imagine the costs to transport, process, transport again, store, package, stock and sell, plus the cost of wastage, could easily add up to that. Especially as many of those things, for milk, will be fuel intensive.

I can believe it at least as easily feeding, watering and milking cows costs 29p (living next to a farm I would think more would be the case btw).

I wonder how much profit they actually make on a litre.

[Justayellowbadge]

speedyguy said:

I remember the old days buying warm milk straight from the cow.

Christ, the till girls at my Waitrose get confused enough when you say 'Do you want the odd 7p?'. I bet Daisy would be a bloody nightmare.

[MX7]

wormburner said:

They squeeze every penny out of everything.

High or low, the price they sell at isn't contradictory to the sensible policy to always buy as cheaply as possible.

How can they be squeezing every penny out of everything when they sell some things for a loss?!!

[XDA]

B17NNS said:

Another revenue stream that dairy farmers might perhaps consider is veal.

Killing bull dairy calves at birth is just plain daft when the animal could have a humane albeit relatively short life and provide quality meat.

There isn't/wasn't the demand for it.

Attitudes are changing though:

http://www.youtube.com/watch?v=fWk2JBY8-vQ

[wormburner]

MX7 said:

wormburner said:

They squeeze every penny out of everything.

High or low, the price they sell at isn't contradictory to the sensible policy to always buy as cheaply as possible.

How can they be squeezing every penny out of everything when they sell some things for a loss?!!

Because if they decide to sell a loss leader there's a greater goal involved. Buying that loss leader as cheaply as you can is squeezing every penny out of it.

[Mark Benson]

Murph7355 said:

Mark Benson said:

...
If it costs a farmer around 29p to produce a litre of milk which Tescos sell for 49p, then the vast majority of profit must have been taken by Tescos - there is no way milk costs 20p/litre to process and transport...

I have no idea on the actual costs. But as a layman I can easily imagine the costs to transport, process, transport again, store, package, stock and sell, plus the cost of wastage, could easily add up to that. Especially as many of those things, for milk, will be fuel intensive.

I can believe it at least as easily feeding, watering and milking cows costs 29p (living next to a farm I would think more would be the case btw).

I wonder how much profit they actually make on a litre.

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

[XDA]

Murph7355 said:

I have no idea on the actual costs. But as a layman I can easily imagine the costs to transport, process, transport again, store, package, stock and sell, plus the cost of wastage, could easily add up to that. Especially as many of those things, for milk, will be fuel intensive.

I can believe it at least as easily feeding, watering and milking cows costs 29p (living next to a farm I would think more would be the case btw).

I wonder how much profit they actually make on a litre.

That's not quite the process.

Its Farm > Dairy (where it's processed and bottled) > Supermarket.

[Jasandjules]

mat13 said:

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

Well rather than lose money he could do nothing and not lose money. Or he could sell the lot for beef or animal food if push came to shove.

[IroningMan]

And that's what a lot are doing - although dairy animals aren't sold for beef.

The model has been broken since the demise of the MMB, and will continue to be so unless/until the producers have a stronger hand with the dairy companies.

[hidetheelephants]

There was programme on the idiot's lantern a while ago with that 'Jimmy "I'm friends with Jamie Oliver" the celebrity farmer'; it showed a whizz-bang modern computer controlled dairy where the cows(!?) decided when they needed milking and wandered in and out of robot milking booths as the whim took them, and spent the rest of the time grazing in pasture outside. The whole shooting match needed maybe one dairyman for 4-500 cattle and the productivity was up 150%. That's the future of dairy farming, although the supermarket monopoly does need addressing.

[Ozzie Osmond]

It's the idiot "hobby farmers" who cause a lot of the trouble. Having made their money elswhere they fancy the country gent lifestyle and are willing to pay for it - which includes farming for little or no profit. They move the market price downwards and farmers who're doing it for a living get shafted. Like all markets, the farm products markets are very sensitive around the edges.

[BMWBen]

Mark Benson said:

Murph7355 said:

Mark Benson said:

...
If it costs a farmer around 29p to produce a litre of milk which Tescos sell for 49p, then the vast majority of profit must have been taken by Tescos - there is no way milk costs 20p/litre to process and transport...

I have no idea on the actual costs. But as a layman I can easily imagine the costs to transport, process, transport again, store, package, stock and sell, plus the cost of wastage, could easily add up to that. Especially as many of those things, for milk, will be fuel intensive.

I can believe it at least as easily feeding, watering and milking cows costs 29p (living next to a farm I would think more would be the case btw).

I wonder how much profit they actually make on a litre.

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

I'm really struggling to understand the economics here... Why doesn't the farmer refuse to sell at less than 70p? Is there some dark force that makes him sell it at that price? If he's not making any money on it why is he doing it? A farmer who can't understand the very basic things about running a business gets no sympathy from me.

[alfabadass]

I'm confused.

If they all sell at a loss...how do they keep on going....!?

[grantone]

king arthur said:

You mean per pint surely?

Checked online, direct links to the websites don't seem to work

Asda £1.18 for a 4 pint bottle, or 2 bottles for £2.00
Sainsburys £1.18 for a 4 pint bottle, or 2 bottles for £2.00 on the 1% fat only
Waitrose £1.18 for a 4 pint bottle, ad for 2 bottles for £2.00 mix and match for certain delivery dates
Tesco £1.18 for a 4 pint bottle, or £1.00 for a 4 pint bottle of their Creamfields branded
Ocado £1.18 for a 4 pint bottle of semi-skimmed, £1.25 for a 4 pint bottle of skimmed or full cream
Aldi £1.00 for a 4 pint bottle

So most are 52p per litre (29.5p per pint) with discounts down to 44p per litre (25p per pint)

[Mr Sparkle]

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

That doesn't take into account the overheads of the supermarket in selling the milk so the profit is less.

_____________
Why does the same not happen with other products? ie. why are we not hearing this about sweets/beer/cheese/bread etc?

[rudecherub]

alfabadass said:

I'm confused.

If they all sell at a loss...how do they keep on going....!?

Farming is a lifestyle choice. ROI is 3-4% - most of the time Farmers could earn more ( assuming they own the land ) by selling and putting the cash in a deposit account.

But the Big 5 Supermarkets function as a monopoly buyer, if you don't sell to the cartel you can't sell.

So what do yo do?

Shoot the cows? or hope it gets better. Most farmers have some mixed element, so Dairy won't be the only income stream, usually when one is down say dairy, eg beef is good.

Farming is a rich man's hobby and a poor man's folly.

[andrew830]

BMWBen said:

Mark Benson said:

Murph7355 said:

Mark Benson said:

...
If it costs a farmer around 29p to produce a litre of milk which Tescos sell for 49p, then the vast majority of profit must have been taken by Tescos - there is no way milk costs 20p/litre to process and transport...

I have no idea on the actual costs. But as a layman I can easily imagine the costs to transport, process, transport again, store, package, stock and sell, plus the cost of wastage, could easily add up to that. Especially as many of those things, for milk, will be fuel intensive.

I can believe it at least as easily feeding, watering and milking cows costs 29p (living next to a farm I would think more would be the case btw).

I wonder how much profit they actually make on a litre.

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

I'm really struggling to understand the economics here... Why doesn't the farmer refuse to sell at less than 70p? Is there some dark force that makes him sell it at that price? If he's not making any money on it why is he doing it? A farmer who can't understand the very basic things about running a business gets no sympathy from me.

We understand how to run a buiness and if you look back over the last 15 years you will see how we have made huge changes.We are now much more efficent in terms of output per man and capitol used.
What the issue is you cannot start and stop a dairy farm like a factory,it takes a minimum of 2 years from when a calf is born untill it produces any milk,when you are up and running milk can only be stored for 48 hours any longer and it is thrown away.
In the mean time you still have to feed them everyday and milk them.
What the dairy farmers are calling for is new contracts with dairies so instead of being contracted for 12 months we can get out with 3 months notice,that way if one drop the price we can move to another.Thats assuming there is more than one dairy in the area.