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The Guardian view on the dairy crisis: too important to be left to the market The Guardian view on the dairy crisis: too important to be left to the market
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It is never all about money. It is, for example, becoming a familiar observation to say that housing, at least in London and a handful of other global capitals, has become not somewhere to live but an investment opportunity, to be bought and sold depending on the likely return. By bearing down on the use of offshore companies as vehicles for house ownership, as the chancellor George Osborne did in the summer budget last month, the government may hope to make a small dent in the surge in house prices which is contributing to the unaffordability of homes across south-east England. It is not just housing that is both a necessity of life and a commodity. So are many foodstuffs – most obviously, this week, milk. Here the government is silent. The cost of food is left to the vagaries of the global market, and the buying policies of the big five supermarkets. And the fate of Britain’s dairy farmers is a question to be settled between them and the Tescos and Morrisons. A lot of cows will have to be led down the aisles of Asda by protesting farmers to change the balance in their favour.It is never all about money. It is, for example, becoming a familiar observation to say that housing, at least in London and a handful of other global capitals, has become not somewhere to live but an investment opportunity, to be bought and sold depending on the likely return. By bearing down on the use of offshore companies as vehicles for house ownership, as the chancellor George Osborne did in the summer budget last month, the government may hope to make a small dent in the surge in house prices which is contributing to the unaffordability of homes across south-east England. It is not just housing that is both a necessity of life and a commodity. So are many foodstuffs – most obviously, this week, milk. Here the government is silent. The cost of food is left to the vagaries of the global market, and the buying policies of the big five supermarkets. And the fate of Britain’s dairy farmers is a question to be settled between them and the Tescos and Morrisons. A lot of cows will have to be led down the aisles of Asda by protesting farmers to change the balance in their favour.
The business of producing milk has been one of the great influences on the shape of the British countryside and British rural life. It played an important role in the development of the patchwork of small fields and hedgerows; it has sustained small family farms for generations; it created the pattern of lanes and hamlets that is typical of dairying areas. Nothing is ever immutable, but the collapse of this particular style of farming has been swift and brutal. In 10 years the number of farms has halved. It is now heading below 10,000, probably for the first time since Tess of the D’Urbervilles took her milking stool out into the Dorset meadows.The business of producing milk has been one of the great influences on the shape of the British countryside and British rural life. It played an important role in the development of the patchwork of small fields and hedgerows; it has sustained small family farms for generations; it created the pattern of lanes and hamlets that is typical of dairying areas. Nothing is ever immutable, but the collapse of this particular style of farming has been swift and brutal. In 10 years the number of farms has halved. It is now heading below 10,000, probably for the first time since Tess of the D’Urbervilles took her milking stool out into the Dorset meadows.
It is easy to make the supermarkets the villains in the argument, and the constant demand for the cheapest available pinta is an important part of the story. Some milk products, such as skimmed milk powder, are now selling at half the price of a year ago. According to the key industry quango, the Agriculture and Horticulture Development Board, prices in the UK have fallen even faster for most British dairy produce than the global prices. The cost of production is about 32p a litre. Some farmers are getting little more than 20p. The deal agreed earlier this week whereby Morrisons will sell a premium farmers’ milk for an extra 10p a litre will be a key test of whether four out of five shoppers really are willing, as they tell the pollsters, to pay more for their milk. Related: Milk prices, morality and market mechanisms | Letters
It is easy to make the supermarkets the villains in the argument, and the constant demand for the cheapest available pinta is an important part of the story. Some milk products, such as skimmed milk powder, are now selling at half the price of a year ago. According to the key industry quango, the Agriculture and Horticulture Development Board, prices in the UK have fallen even faster for most British dairy produce than the global prices. The cost of production is about 32p a litre. Some farmers are getting little more than 20p. The deal agreed earlier this week whereby Morrisons will sell a premium farmers’ milk for an extra 10p a litre will be a key test of whether four out of five shoppers really are willing, as they tell the pollsters, to pay more for their milk.
Downward price pressure is only part of the story. Another significant factor is its volatility. Being at the whim of the world’s commodity markets means a farmer in Cheshire is vulnerable to a fall in demand from China, and Russia’s ban on EU food imports in retaliation for Brussels-imposed sanctions. At the same time as the quotas that controlled Europe’s supply of milk were ended there have been perfect growing conditions. Supply is soaring. The result is a perfect storm – one that older or heavily indebted farmers struggle to survive. Faced with such uncertain returns, no wonder the number of young people prepared to make the commitment to a life tied to (at least) twice a day milking schedules is in freefall.Downward price pressure is only part of the story. Another significant factor is its volatility. Being at the whim of the world’s commodity markets means a farmer in Cheshire is vulnerable to a fall in demand from China, and Russia’s ban on EU food imports in retaliation for Brussels-imposed sanctions. At the same time as the quotas that controlled Europe’s supply of milk were ended there have been perfect growing conditions. Supply is soaring. The result is a perfect storm – one that older or heavily indebted farmers struggle to survive. Faced with such uncertain returns, no wonder the number of young people prepared to make the commitment to a life tied to (at least) twice a day milking schedules is in freefall.
What is happening in the dairy industry, however, is only one part of a particularly vicious food crunch. Earlier this week, we reported on a group of Lithuanians who had been trafficked into slavery by a Kent-based gangmaster in the egg industry. In the first case of its kind, they are now suing. Like milk, eggs are the kind of basic foodstuff that supermarkets use to bring in the shoppers. Meanwhile, food processing of all kinds is now Britain’s biggest manufacturing employer, a major destination for migrant workers prepared to work long hours for low pay. For consumers, this is not all bad. Low or falling food prices have contributed to low or non-existent consumer price inflation, and when at least 500,000 people have to rely on food banks, cheap food matters (although higher pay and a more efficient benefits system that leant less heavily on sanctioning clients would mean it mattered less). What is happening in the dairy industry, however, is only one part of a particularly vicious food crunch. Earlier this week, we reported on a group of Lithuanians who had been trafficked into slavery by a Kent-based gangmaster in the egg industry. In the first case of its kind, they are now suing. Like milk, eggs are the kind of basic foodstuff that supermarkets use to bring in the shoppers. Meanwhile, food processing of all kinds is now Britain’s biggest manufacturing employer, a major destination for migrant workers prepared to work long hours for low pay. For consumers, this is not all bad. Low or falling food prices have contributed to low or non-existent consumer price inflation, and when at least 500,000 people have to rely on food banks, cheap food matters (although higher pay and a more efficient benefits system that leant less heavily on sanctioning clients would mean it mattered less).
Yet low food prices also mean waste. British consumers – while not as thriftless as consumers in Australia or the US, who throw away more than a third of what they buy – still bin 4.2m tonnes of edible food each year, which is more than 10% of all the food they buy. Avoiding waste could save the average family as much as £60 a month. Making sure that food is fresh, healthy and affordable is a matter of public health, a measure of national wellbeing. It is a political issue. The only thing that’s missing is a policy. Yet low food prices also mean waste. British consumers – while not as thriftless as consumers in Australia or the US, who throw away more than a third of what they buy – still bin 4.2m tonnes of edible food each year, which is more than 10% of all the food they buy. Avoiding waste could save the average family as much as £60 a month. Making sure that food is fresh, healthy and affordable is a matter of public health, a measure of national wellbeing. It is a political issue. The only thing that’s missing is a policy.