THE PRICE OF A PINT (PART 2)

Before the last Westminster General election in May 2010 there was much talk (even from the Conservatives) of the need for a Supermarket (and even a Milk) Ombudsman, and a pressing need for votes, since then there has been an effective silence from Westminster. One view from this side of the bridge that may be increasingly shared is that the Supermarkets bought their tame politicos in the Westminster village (well before the Political Parties and Referendum Act 2000 came in) so they can continue to aggressively pursue ever greater shares of the profit with minimal regulation.

At present one litre carton of full-fat, non-organic milk can cost around 65p (01.02.2012 figures). From this a farmer got between 21p and 28p. Production costs come in at around 28p. Over the last ten years two thirds of dairy farmers in England and Wales have gone out of business, that it is estimated works out as one dairy farmer leaving the industry every day. The situation has not got any easier for the farmers or the consumers, especially as we now have to factor in increased transport and production (fuel) costs.

When it comes to a fair deal the current milk prices make grim reading as the shelf price for four pints has remained largely static at around £1.27 for 4 pints since February 2011, and widespread promotions continue to be offered on liquid milk in May with Sainsbury’s and Asda offering 2 x 4 pints for £2.00 and Tesco offering 3 x 4 pints for £3.00. Supermarkets are also widely offering branded and organic milk on promotion – guess who takes the hit for cost cutting – the farmers!

DEFRA's annual data showed that the average UK farmgate price (Defra, Dairyco.net) stood at 29.27ppl at the end of January 2012. The GB average price was 29.38ppl in November 2011, 0.29ppl (1.0%) higher than the previous month and up 3.44ppl (13.3%) compared with November 2010. The Northern Ireland (NI) average for November was up slightly, to 28.76ppl, an increase of 0.20ppl (0.7%) compared with October and 1.07ppl (3.9%) more than the previous year.

What's happening is that we are in the process of losing a critical mass of milk suppliers (something the NFU is only too aware of) and UK farmers are no longer in a position where they can supply the UK's “core milk requirement” which is around some 13 billion litres per year (2010 figures). In 2009 / 2010 year there was a 15 percent drop in UK Milk prices. It is no coincidence that over the last 10 years that Supermarkets’ margins (e.g. the amount of the price they take) on milk have doubled.

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.

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

The banks (pre Mrs T) fell over themselves throwing credit at our farmers to encourage them to (as per Government and the EU policy) to expand their production. Mrs T’s particular brand of Conservatism was never that interested in farming, they were far more enamoured by the iffy money men in the City, so did nothing to prevent the imposition of Milk quotas (or their consequences) the bad times had begun for our Dairy farmers and oddly enough the banks stopped calling with offers of cheap credit.

As consumers we 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 produced in these islands 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. I think that there is little point in hoping that the Con Dem Government will get its act together, wake up and pull the fat (or the milk) out of the fire...because they won't.