That’s Enough Bureaucrats Sticking Noses In Our Milk
UK - Like Melanie Reid, writing in these pages yesterday, I have a local herd of cows with whom I frequently share social intercourse. In my case, however, it tends to be limited to: “Now why don’t you just shift your butt over there, then I will be able to get through that gate.” As for lessons in the economics of global food production I tend to look elsewhere.
4 September 2007
2 minute read
It is quite true that cattle farmers have had a hard time of it over the past few years; many have given up their farms and huge numbers feel cruelly unrewarded for their hard work. But the current upheavals in agriculture, which are now rewarding farmers who clung on to their farms with higher prices, are not the fault of the retail food industry and supermarkets. They bear the indelible mark of central planners in Whitehall and Brussels.
Farmers have a point in that supermarkets have been merciless in negotiating prices of milk. But they could only get away with this because of the glut in production caused by the Common Agricultural Policy. Some of the dairy farms that have gone under in recent years should really have been allowed to founder decades ago, but have been propped up artificially by subsidies that insulated farmers from market forces, and led to huge gluts – remember the EU butter mountain?
The fall in milk prices at the beginning of this century was not ultimately due to the supermarkets but down to increased production at a time when consumers wanted to buy less milk. Between 1996 and 1999 the output of cattle in the UK rose from 13,975 million litres to 14,580 million litres – prompting the milk prices to fall from 25p to 17p a litre. Since then, a shake-out of cattle farms has brought milk production (in 2006) back down to 13,938 million litres, with the result that prices have climbed back towards 25p a litre.
