BBC's Countryfile was commenting on the low price farmers get for milk and how they need a huge dairy herd to make a profit. I think it said that farmers get 26p per litre for their milk and their total costs are about 28p. Not surprisingly a representative from a milk processing company blamed the low price paid by supermarkets. And, of course, the supermarkets say they are looking after their customers.
But would we really care if our milk cost 5p more per litre? Would we even notice?
There may well be grounds for a separate debate about the size of supermarket profits, but, in reality the cost of milk is irrelevant to them provided each supermarket chain is paying about the same as its competitors. If the cost price of milk went up by 5p a litre the supermarkets would just raise their retail price by 5p (or 6p). And the supermarkets don't care how much milk people buy. If milk sales go down they will just put another product in that shelf space.
So it seems most likely that the low profits farmers get from milk are their own fault for selling their milk too cheaply - each one down-bidding the next. I've never understood why they don't club together to create a selling power to match the supermarkets' buying power.
Who benefits from building enormous mechanized dairy farms? Not the cows, not the farmers and not the consumers of milk. The suppliers of the mechanization equipment and the bankers that finance it are the main beneficiaries. OK, for a time the mechanized farmer may benefit because he can sell his milk a fraction cheaper than his non-mechanized farmer neighbour. But in a short time the market, in the guise of an even bigger mechanized farmer, will squeeze the profit out of the smaller mechanized farmer also.
And if some smart-aleck suggests that a farmers' "cartel" would be illegal under competition law isn't it time to ask ourselves who that law was meant to protect? Do we want competition law to put farmers out of business?
Indeed what would be wrong with minimum prices for farm products just as we have a minimum price for labour!
