Another victory for free markets over common sense....
The OFT fined (August 2011) the four major supermarkets and several dairies nearly £50 million for colluding to keep milk (and cheese) prices up - in order to pay dairy farmers a living wage. The OFT prosecutes the rights for consumers to pay low prices – at a cost to the dairy farmers of Britain At first glance, you may think ‘it is about time the supermarkets were done for fiddling’. But wait.. “Retail statistics show the dairy sector is only second to the alcoholic beverage sector in terms of sales in GB. Unfortunately even with such a consumer base and demand for dairy products, English dairy farmers have not prospered in recent years. English dairy farmers have been going out of business and, in the last ten years alone, the number of dairy farms has almost halved with year on year reductions in cow numbers and milk production. Many farmers lay the blame at the feet of the supermarkets and in particular the ‘big four’ who dominate food retailing in GB.” Said a delegate at European Dairy Farmers, Stoneleigh Our friend is right to blame the markets. In the last 10 years there has been an overproduction of milk compared to the amount consumed. Dairy farmers may have decreased but dairy production has not, averaging about 14bn litres/yr (UK's EU quota). Cows have become more productive - a Holstein cow can now produce 10,000 l/y compared to the 6,500l/y average. A further 0.5b is exported and only 70 m imported. Liquid milk consumption has fallen, while about half of the total is turned into cheese, yogurts and the like, there is still the tendency to over supply. Milk suffers from its own efficiency. Markets are good when there are shortages, by pushing prices up. But hopeless when there is oversupply, as they deliver power prices. Free marketeers dont mention this. Yet it is the common threat hanging over most farmers - certainly in UK since the Repeal of the Corn Laws. Whether he should blame the supermarkets is another matter. In this case the supermarkets did try to do something to support their suppliers. They know that in the long term we need to guarantee supplies by looking after their suppliers and the way to do that is have good relations with your supply chain. Yet somehow, helping your UK suppliers is now a crime! We need to support our dairy farmers as they are in dire trouble. Round here in the Many will feel that supermarkets always seem to make money out of any crisis. Many feel that while world food price rises are going up, they are going up even more in the supermarkets. Yet to pick on this particular milk issue beggars belief. If OFT had checked to see whether the supermarkets were profiteering from the dairy consensus, that would have been welcome. But all OFT have been interested in is the price for the customer. Yet, how many people know how much a pint of milk costs? Do you? A few people will be concerned about 2p per pint extra, but the vast majority would not have even noticed it. OFT recognised that the supermarkets are pretty competitive, but persisted with this particular case. Even when the case regarding milk was weak, they continued with cheese. The conclusion is that the retailers are not allowed to do anything – that involves monetary support, to encourage home grown farming. It makes you wonder whether the supermarkets can do anything for food sustainability and food security, if OFT are going to jump on them saying ‘but it costs the customer more’! Curiously the government does nothing to stop financiers gambling on food prices. They said at the last G20 (commentary), called by resident Sarkosy to 'rebalance the structure of capitalism', that there was no evidence that speculation was increasing wider food price rises. Perhaps they should spend the same time and energy as they have investigating milk prices on these wider food price rises. Financiers can gamble on pushing prices up, pocketing the profit, but retailers and dairies cannot work together to invest in local production – and green growth. Further References OFT http://www.oft.gov.uk/news-and-updates/press/2011/89-11 Farmers Guardian http://www.farmersguardian.com/home/business/-oft-fines-dairy-companies-and-supermarkets-%C2%A350m/40848.article
Food Drink Business http://foodanddrinkbusiness.com/?p=6272&cpage=1#comment-6303 OFT changes course http://www.foodmanufacture.co.uk/Business-News/Tesco-threatens-legal-recourse-after-OFT-absurdity History http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/7655904/OFT-backs-off-in-milk-price-fixing-probe.html
Milk http://www.guardian.co.uk/books/2011/jul/30/milk-local-global-history-review
Added this comment to FDB ‘This action by OFT is appalling and sends the completely wrong message to retailers and others who may be trying to encourage home grown farming. Many are trying to encourage better food security and more sustainable food production, and expecting the retailers to take the lead. But if they do anything to help and encourage production in this country, against threats from cheap imported food at a cost to our local communities, OFT will jump on them saying: "the customer is paying more". We have to persuade people that we do need to pay more and the OFT to have some common-sense instead of bowing down to the god of free markets.’
Reports: 2010, 2009, 2008, 2007, 2006
|
|||||
| © 2011 EP@W Publishing Co Ltd |
Tesco, Sainsbury’s, Morrison’s and ASDA recognised the case for small dairy farmers. One wonders where Cooperative Retail (No 5) was on this? These big four recognised