Tuesday, 27 July 2010


When you consider the price of a pint (milk not beer), there are some things we should all be aware of. Firstly, a litre carton of full-fat, non-organic milk can cost between 70-80p of the shelf. Secondly, from this princely sum, a farmer will get between 21p and 28p. Thirdly, you can add in production costs off around 28p. Ouch! No wonder during the last 11 years some two thirds of dairy farmers in England and Wales have gone out of business, and finally it has been estimated that one dairy farmer leaves the industry every day.

Pretty grim reading, even grimmer if you are living it. Now historically the answer to low milk prices or a surplus was to turn excess milk into other dairy products, with dairies producing other valuable products like butter, cream, cheese and yoghurt's. Milk aside, diary products are big business, especially when you consider that a 25 pence litre of milk may end up as something that sells for 15 times as much. People are prepared to pay good money for ‘health yogurt’ – which with the addition of bacteria, flavouring and a marketing campaign produce pretty healthy profits for the companies that produce them.

Here's something else to think about, around 40 per cent of our yogurt is made in France and Belgium, in 2009 more than 40 per cent of all Cheddar sold in the UK was produced overseas. It’s a pretty similar story when it comes to our butter. Only one of the most popular supermarket brands [Country Life] is actually from UK sourced milk. The vast bulk of our butter comes from Denmark and Ireland, and this is despite the fact that farm gate prices for milk remain consistently higher in Europe than here in the UK.

We (in the UK) when compared with 10 years ago are now importing nearly half our butter from abroad, cheese imports are also up, around 60 percent over the last ten years. We are importing those products that have added-value and are exporting the low-value milk products which are then ironically turned back into butter, yogurt, etc and sold back to us. This is madness; this is what happens in the Third World, where countries export their raw commodities cheaply and then have little choice but to buy back the manufactured products that are made from their own raw materials. Successive UK Governments both Conservative and New Labour have sat back and allowed this to happen.

The NFU has suggested (and believe me they should know) that the UK is in the process of losing a critical mass of milk suppliers and that we are no longer in a position where we supply the UK's “core milk requirement” which is around some 13 billion litres per year. In the last year there has been a 15 percent drop in UK Milk prices. In the last 10 years the Supermarkets’ margins (that is the the amount of the price they take on milk) have doubled in ten years. Now with a trend for both the processor and retailer to be the same, we have a situation where they take over three quarters of the price of a pint. We have now reached the situation where in a land renowned for Dairy farming and where even though the price of our milk is cheap, we are now become a net importer of milk.

The development of railway communications during the industrial revolution provided the means to deliver the farmers milk to our towns and cities and ironically as a knock on effect there was an increase and greater spread of diary production. It is doubly ironic that the first supermarkets (Sainsbury’s in Covent Garden, London, in 1869) sold what was then called “railway milk” from churns. The milkman arrived next delivering direct to our doorsteps, his near demise which followed some years later was a direct result of super market price-cutting which has now, more or less, effectively killed him off.

As as early as 1914, the UK Government recognised that milk was pretty important for nutrition in children, that it helped prevent rickets, and provided vitamins. And so the first government attempts to regulate milk’s supply and quality came about. Pasteurization was duly brought in to kill of certain bacteria. We now have low fat milk, slimmed milk, semi skimmed milk, etc – it is worth remembering that full fat milk is only 4 percent fat, low fat milk being 2 percent (or less) and that milk is approximately 95 percent water anyway.

If is worth further remembering that during the good times, pre Mrs Thatcher, the banks positively fell over themselves throwing credit at framers to encourage them to (as both the UK Government and the EU wanted) to ever expand their production. Once Mrs T and the Conservatives who were never particularly interested in farming anyway, being far to enamored of dodgy loads of money men in the City, allowed Milk quota’s (effective cuts) the bad times had begun to roll for our Dairy farmers and oddly enough the banks stopped calling with offers of cheap credit.

Note as well that What can best be described as industrial milk production is (and was) not without its problems – slurry production being one of them, which can be enormously toxic and environmentally damaging. Something else to consider is that modern cows to produce large amounts of cheap milk, a While a modern Frisian may produce as much 4 times as much milk as equivalent cows did 50 years it only has three milking years in which to do it.

The talk of a milk ombudsman is welcome, but it needs to be more than talk (it will need real teeth), there is a need for action, before our dairy farmers (and our farmers) are driven out of business entirely. What may follow if nothing is done may not be very pretty, it may be semi industrial and serviced by cheap migrant Labour. Supermarkets have to take a share of the blame for aggressively pursuing ever greater shares of the profit.

Successive UK Governments (both Conservative and Labour) have also failed to take any meaningful action – this either being down to a combination of nice financial inducements from large Supermarkets and / or a general indifference to the agricultural sector. We, as consumers also have to take a share of the blame because we allowed all of these things to happen, if we want quality milk and dairy products (that are produce from UK milk) then we will have to change the way we buy, if we do that then out farmers will get a better deal. Sadly I suspect that I won't be holding my breath for the current Con Dem Government to pull the fat (or the milk) out of the fire...

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