Will you pay another 23p for farmers milk?

[unbeliever 10]

Unfortunately it might mean that the entire industry in the UK is gone.

Which makes us then reliant on imports, a situation we don't want to be in.

 

Imports from where?

Milk is heavy and therefore expensive to transport.

Who is so strong in the milk market that they can undercut every farm in the UK?

[Cyclone 10]

I expect them to charge what they can. If they price is well above the production costs then I'm sure other places will open to start production, increase supply and the price will fall. Simple economics which tends to escape a lot of people on here...

 

There are relatively high barriers to entry and exit though. The capital costs to set up are pretty high, and on exiting you lose that entire investment.

 

---------- Post added 12-08-2015 at 11:38 ----------

 

See you don't get a response, you just get a different question back. I'm almost thinking this is Mecky in disguise.

 

Answer the points raised TJ and I'll consider answering yours.

 

He's got a point, supermarkets wield excessive market power and form an oligopoly. The suppliers are fragmented and have little power to negotiate.

[Obelix 11]

Unfortunately it might mean that the entire industry in the UK is gone.

 

Why do people always assume that if a business closes it can never open again?

[Cyclone 10]

Imports from where?

Milk is heavy and therefore expensive to transport.

Who is so strong in the milk market that they can undercut every farm in the UK?

 

If that's the case then the UK market is safe, it won't go entirely out of business because importing would be more expensive.

Unless French diary farmers get massive CAP subsidies of course.

 

---------- Post added 12-08-2015 at 11:43 ----------

 

Here are the accounts for the UKs largest independent dairy. They seem to be doing okay.

 

http://companycheck.co.uk/company/02720823/MEADOW-FOODS-LIMITED/financial-accounts

 

I tried to look up Our Cow Molly, but apparently that business has existed for less than 1 year... Which seems odd as they claim to have existed since 1943 or something like that.

[unbeliever 10]

If that's the case then the UK market is safe, it won't go entirely out of business because importing would be more expensive.

Unless French diary farmers get massive CAP subsidies of course.

 

---------- Post added 12-08-2015 at 11:43 ----------

 

Here are the accounts for the UKs largest independent dairy. They seem to be doing okay.

 

http://companycheck.co.uk/company/02720823/MEADOW-FOODS-LIMITED/financial-accounts

 

I tried to look up Our Cow Molly, but apparently that business has existed for less than 1 year... Which seems odd as they claim to have existed since 1943 or something like that.

 

May I just say how pleasant it is when somebody comes onto one of these threads, looks at the facts presented, finds more useful facts; and then forms an opinion based on them. Thank you.

[Obelix 11]

He's got a point, supermarkets wield excessive market power and form an oligopoly. The suppliers are fragmented and have little power to negotiate.

 

I seem to recall they once created something called Asquith Dairies. Shame they lost control of it. https://en.wikipedia.org/wiki/Asda#History

[Cyclone 10]

This is a local dairy, it seems to be recovering from a negative net worth quite well.

 

http://companycheck.co.uk/company/08032923/MIDDLETONS-DAIRY-LIMITED/financial-accounts

 

---------- Post added 12-08-2015 at 11:49 ----------

 

And another that seems to be doing just fine.

 

http://companycheck.co.uk/company/04182340/JACKSONS-DAIRIES-LTD/financial-accounts

 

---------- Post added 12-08-2015 at 11:50 ----------

 

What these accounts don't show is how much the shareholders are taking out of the business, but presumably it's sufficient to live on, and in some cases if the company is still retaining 10's of thousands then it's probably enough to live on very well.

[TJC1 10]

Yes. Otherwise they would all have gone bust years ago.

Government figures show the gate price of milk over 30p for most of 2013 and 2014.

And they protest every time the gate price of milk drops.

How about they work on reducing production costs rather than whinging about the free market competition which they don't seem to mind profiting from the rest of the time.

It will happen again inevitably and automatically when either demand rises, or supply drops as the weaker farms fail.

 

You've still not answered the question.

 

Do you think the farmers will return the favour when there's a milk shortage and prices are running well above production costs?

 

I wouldnt put money it.

Are the supermarkets going to reimburse farmers for forcing them to provide milk under cost price?

[Eric Arthur 10]

Yes, I'll pay it. (Although I would prefer the supermarkets to pay more to the farmers and absorb the cost themselves, I think their profits can stand it.)

 

Can we really afford another industry to go to the wall?

Once it's gone, it will be gone for good, and once the supermarkets have created a monopoly, they'll be able to charge what they want, and you can be sure prices will go up.

 

However at least Morrison's has listened; compromised; and is giving us a straight choice. It's a start, so well done to them.

 

---------- Post added 11-08-2015 at 23:04 ----------

 

 

Read this after my post.

 

What do you think would help the dairy farmers? (serious question.)

 

As I explained, Morrison isn't really helping anyone except themselves. They could well be making things even worse for most farmers and you'll be complicit by buying their more expensive farmer friendly milk.

[Obelix 11]

He's got a point, supermarkets wield excessive market power and form an oligopoly. The suppliers are fragmented and have little power to negotiate.

 

They have the same power to negotiate as anyone else, but you don't hear about meat farmers, or cereals having the same problem.

 

One thing that would help is if you could sell unpasteurised milk more freely - at the moment you have to sell it on the farm premises I think to the end user. Off-sales not allowed... There are obvious health issues associated with this of course though.

 

Personally I get my milk direct from the farm, but I'm lucky that I can walk there and get it warm from the cow every morning... it also costs less than supermarket price and I presume the farmer is making a tidy packet on it as it's well above the oft toted farm gate prices. If there are inefficiencies it could well be that the supply chain needs looking at as well as the end distributer.

 

---------- Post added 12-08-2015 at 11:54 ----------

 

I wouldnt put money it.

Are the supermarkets going to reimburse farmers for forcing them to provide milk under cost price?

 

How are they forcing them? Gun to the head? Pay up or we will send the boys in to smash your farm up?

 

Do yourself a favour and drop the weasel words.

[Eric Arthur 10]

Produce less milk, so the price rises.

 

How do they do that?

 

The only way that I can think of isn't very healthy for the cows and the lead in time when production needs to increase will be a bit of a bugger.

[Obelix 11]

This is a local dairy, it seems to be recovering from a negative net worth quite well.

 

http://companycheck.co.uk/company/08032923/MIDDLETONS-DAIRY-LIMITED/financial-accounts

 

---------- Post added 12-08-2015 at 11:49 ----------

 

And another that seems to be doing just fine.

 

http://companycheck.co.uk/company/04182340/JACKSONS-DAIRIES-LTD/financial-accounts

 

---------- Post added 12-08-2015 at 11:50 ----------

 

What these accounts don't show is how much the shareholders are taking out of the business, but presumably it's sufficient to live on, and in some cases if the company is still retaining 10's of thousands then it's probably enough to live on very well.

 

Who are the shareholders? For a lot of farms the farmer is often a large shareholder as it's tax efficient to remove "wages" that way - it's often much more sensible than a partnership or sole trader arrangement.