Farmers - why do you have a right to a favourable price?

Surely the issue is that unlike most other areas of industry, farming is a hard area to make more effecient without massive economies of scale or massive technological investment that with the prices farmers get paid funnily enough they cant afford.
 
IMO two things, supermarkets do indeed force prices on yo farmers.

Farmers have got so many opotunties to expand it yo dozens of different areas, yet most resist this and just complain unyill they go under.

Still of the opinion farm shops should look and be same places as the likes of tesco metro and have 24/7 opening times. Get a dozen companies working together to run one shop, fresh bread, proper meat counter, readymeals, sauces the lot. Cutting out the middle man and so many small companies sharing shop cost, I'm sure they could do well on price.
 
Greebo said:
Milk is a pricing war for supermarkets. It's stupid when they sell milk for less than what it costs the farmer to make it sometimes.

The supermarkets have a strangle hold on milk and basically set the price.

How many people even check the price of the milk they are buying?

The dairy industry is mad and is too controlled by the big supermarkets now. A few years there was a shortage of milk in the uk due to a cold spring and the grass flush not really happening.

Arla, one of the biggest dairies in the country, wrote to all their milk farmers and said because their contract with the supermarkets meant they had to supply x amount of milk at y price, they were having to import millions at extra cost so therefore they were going to pay the uk farmers 2p less.

Only in the uk dairy industry can a shortage mean the price of the goods drop.

What was wrong with making the consumer pay 2p more since it is in short supply?
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Because you foolishly made a contract with your consumer to sell it to them at a fixed price.

Telling them its 2p more would have you in breech of contract and facing a vicious team of lawyers.
 
lokiss said:
We buy the 23p farmers milk from morrisons. Also I read in the paper today that arla are introducing a range with same extra price point, that goes directly to the farmers.

This is one I support.
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Arla supply Morrison's milk. They pay below the cost of production, and are one of the worst offenders in the industry, with one of the lowest prices paid to farmers. Buying your milk from them while claiming to support farmers is something of a fallacy. If people hadn't lapped up the 'For Farmers' marketing crap, Morrison's might have caved in by now and agreed to pay a fair price for every litre of milk sold.

Want to buy from a reasonable supermarket? Try Sainsbury's, Waitrose, Marks and Spencer or Co-op. They all work exclusively with their own collection of farms, and pay a price calculated from the cost of production. Cost of production goes up, farmers get paid more. Cost goes down, farmers get paid less. The profit stays pretty much constant.
 
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Stop producing milk if the going rate is below the cost price?

Sounds like inefficient farmers asking for protectionism.

If the supply of milk decreased as a consequence then the price would go up.

Supermarkets can "force" prices simply because there is supply willing to accept those prices.
 
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muon said:
Stop producing milk if the going rate is below the cost price?

Sounds like inefficient farmers asking for protectionism.

If the supply of milk decreased as a consequence then the price would go up.

Supermarkets can "force" prices simply because there is supply willing to accept those prices.
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But they've all got contracts to supply X liters.

If they drop production they get sued to oblivion
 
People do go mad when the price of milk goes up by even 10p. Yet will sit and buy a pint of beer at £2.50 and not even question it.
 
Tefal said:
But they've all got contracts to supply X liters.

If they drop production they get sued to oblivion
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Well that would presumably be at a fixed price.

What moron would agree to supply X litres at a variable price.

Once that fixed price contract runs out, quit or renegotiate. That's what every other business does. It looks at what return it will make, and if those returns aren't acceptable you don't make the investment.
 
I also think some of this is due to CAP which has created a sense of entitlement to protectionism in the agricultural sector and has promoted massive overproduction across Europe.
 
stopper said:
We shouldn't be drinking cows milk anyway. We are the only species on the planet, to drink another species milk by choice.
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Are also the only specially the planet to eat good from thousands of miles away on a daily basis. Eat out of season fruit and veg.

And the only one to use the Internet to communicate
 
muon said:
Well that would presumably be at a fixed price.

What moron would agree to supply X litres at a variable price.

Once that fixed price contract runs out, quit or renegotiate. That's what every other business does. It looks at what return it will make, and if those returns aren't acceptable you don't make the investment.
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Cause when it comes to renegotiate supermarkets are so massive they can offer a low price or drag out the negotiations till you're desperate and have to give in while they import from outside at a loss for a short period.
 
Then quit. Why continue operating at a loss. From the sound of things farmers are either operating at a loss and subsidising supermarkets (which is silly to be persisting) or the whole thing is exaggerated possibly by a vocal minority who are just innefficient.
 
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muon said:
Then quit. Why continue operating at a loss. From the sound of things farmers are either operating at a loss and subsidising supermarkets (which is silly to be persisting) or the whole thing is exaggerated possibly by a vocal minority who are just innefficient.
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Most farmers are already very efficient, it's not an industry where there's a lot of room for improvement. Often extra efficiency comes through intensive farming techniques and these aren't always desirable, particularly where animals are concerned. Economies of scale can help, but that's not an option for many farmers.

Changing to a different type of farming isn't always viable either, depending on location, soil type and the investment needed for new machinery etc.

But yes farmers could just give up farming altogether and work in a call centre like the rest of service industry Britain. But there's many many good reasons to keep the land in production even if it means accepting some subsidies. Not least of them food security.
 
muon said:
Then quit. Why continue operating at a loss. From the sound of things farmers are either operating at a loss and subsidising supermarkets (which is silly to be persisting) or the whole thing is exaggerated possibly by a vocal minority who are just innefficient.
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Because if you've lived as a dairy farmer giving up your lviley hood your home your land your business is not going to bw an easy decision.

Many will struggle on at a loss hoping tk recover or improve next year.
 
alx said:
I'm not completely arguing against your points, but I'd slightly dispute the "supermarkets just respond to the market".
They are often so big, and are so key to a suppliers business, that they can effectively dictate the price they pay. I remember this being a point raised previously about supermarkets bullying suppliers.
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^
 
The supermarkets can also hold Polish supplies for most UK produce over the farmers heads. You can be confident that in a race to the bottom UK farmers would lose.

The cost concious Btitish consumer doesn't care that UK farmers will produce to higher welfare standards than overseas suppliers. They won't care about the land management role farmers undertake that leads to that bucolic patchwork countryside we all love. They want cheap milk and food and if the supermarkets can squeeze the prices out of them all the better. But most people just won't think about it.

If the shoe was on the other foot and they had no choice about how much they had to pay because a monopoly was driving the cost up the wails would start quick enough.

And whilst it sounds great not every farm can diversify, there is a limit to how much craft cheese people will buy or the number if suitable locations for holiday cottages or locations for subsidy sucking solar farms. Many farmers will be just stuck in a crappy position with one customer who abuses their dominat position.
 
I have a friend who produces stuff for a couple of supermarkets, they most definitely set the price of the product - my friends business is the only one in the UK that can produce consistent quality and consistent quantities required by the two he sells to - he is in as strong a position as you could be, but every six months they come back and try to negotiate the price downwards.
At the moment he reckons that his profit is all from direct supply to restaurants and the huge quantities to the supermarket barely pay for the staff/equipment - so if he only had that route to market he would likely go under. Only because of the supermarkets profit margins, the on-shelf price of his product has hardly changed for three years but he makes less out of it now
 
I'm afraid to say I'm one of the ones that isn't all too bothered about where the conditions of what the milk is made and instead the price.
To me, milk is something that I put in my tea/coffee, I can't say I'll notice the taste either way.
 
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