Will you pay another 23p for farmers milk?

[unbeliever 10]

And the current profit supermarkets make from under cost price farmers milk. What happens to that?

 

Give the current retail price of milk, the customers are getting a large chunk of it.

 

If there was only one supermarket chain in the country, I might be worried. But they're in a constant state of intensive competition.

Edited August 12, 2015 by unbeliever

[sgtkate 10]

Farmers margins are not being squeezed by the supermarkets. They are falling because they are producing too much milk.

 

It's simple excess supply. The farmers want a free market to sell their goods on except when it's inconvenient to them? Sorry, that's really not how it works at all....

 

Actually, that isn't true at all and it's not even *really* the supermarkets to blame this time. It's dairy collectives like Robert Wiseman that are. Initially these were setup by the farmers themselves to pool resources and act as a trading block at it's most simple. This allowed them to trade with the supermarkets as they would have a constant supply a small local farmer couldn't guarantee.

 

So, the farmers signed up to these collectives and then the trouble started. Robert Wiseman starting taking a cut of the margins to market and store the milk. The farmers couldn't risk losing supermarkets as their customers so they had little choice but to accept it. This trend had continued with the supermarket paying out a reasonable amount to the farmers but their 'collective' taking most of the profit leaving the actual milk producers shafted.

 

The only supermarket that doesn't use the collective is the Co-op, and as they pay their farmers directly they appear to pay less per litre than say Asda, but if you compared how much of that payment actually goes to the farmer you can clearly see the Co-op is doing it right. Sad they continually get a kicking in the press though huh?

[TJC1 10]

Actually, that isn't true at all and it's not even *really* the supermarkets to blame this time. It's dairy collectives like Robert Wiseman that are. Initially these were setup by the farmers themselves to pool resources and act as a trading block at it's most simple. This allowed them to trade with the supermarkets as they would have a constant supply a small local farmer couldn't guarantee.

 

So, the farmers signed up to these collectives and then the trouble started. Robert Wiseman starting taking a cut of the margins to market and store the milk. The farmers couldn't risk losing supermarkets as their customers so they had little choice but to accept it. This trend had continued with the supermarket paying out a reasonable amount to the farmers but their 'collective' taking most of the profit leaving the actual milk producers shafted.

 

The only supermarket that doesn't use the collective is the Co-op, and as they pay their farmers directly they appear to pay less per litre than say Asda, but if you compared how much of that payment actually goes to the farmer you can clearly see the Co-op is doing it right. Sad they continually get a kicking in the press though huh?

 

Thats an interesting side to the argument. Good to see a bit of focus on the issue for a change.

 

---------- Post added 12-08-2015 at 12:47 ----------

 

Give the current retail price of milk, the customers are getting a large chunk of it.

 

If there was only one supermarket chain in the country, I might be worried. But they're in a constant state of intensive competition.

 

All supermarkets are bothered about is market share and putting independants out of business. I dont feel sorry for them

[psynuk 10]

yet farmers are doing it out of the good of their hearts?

[unbeliever 10]

 

All supermarkets are bothered about is market share and putting independants out of business. I dont feel sorry for them

 

Me neither.

One or more of the big chains will probably collapse in the next few years because of the intensive competition from the new players.

That's what's supposed to happen.

We're all getting cheaper food as a result.

 

What makes dairy farmers different?

[apelike 10]

I wouldnt put money it.

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

 

But is it really under cost price?

 

Dairy farms get EU subsidies which is paid by us so we are already paying towards their profit. The problem is trying to find out how much subsidy they are getting for producing a pint of milk. That money is given to them to actually keep the price low and they are happy to take it.

 

All this complaining about the supermarket prices has been going on for years so how come most are still producing too much milk? Is it because the EU subsidy is paid per acre and herd size?

 

So are these farms actually making an overall loss?

[Cyclone 10]

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

Which is basically none, when you're talking about relatively small providers selling to a few huge customers. In this scenario the oligopoly of customers has the majority of the negotiating power. They can simply cut off any producer who tries to increase price, whereas when the customer says "hey, the price is going down, suck it up" the suppliers have little choice but to accept it. This is all economics 101, which you mentioned earlier.

 

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 ----------

 

 

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.

 

Presumably it's "supply us milk at the price we the oligopoly say, or we won't buy your milk and you'll be bankrupt in a month or two".

 

---------- Post added 12-08-2015 at 13:24 ----------

 

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.

 

Given that these are limited companies I was assuming that the shareholders are the farmer and maybe a few other family members. Hence why I mentioned dividends, which don't show up in the account summary, they just reduce the net value of the company.

 

---------- Post added 12-08-2015 at 13:26 ----------

 

How many dairy farms have you run? Dont you think experienced farmers havent thought about these things?

I suspect its as lean as it can go. Hence the protests.

 

Weren't you claiming on another thread that ALL businesses can make efficiency improvements. Perhaps farmers should just reduce their working hours to 30 a week in order to become more productive...

[unbeliever 10]

Presumably it's "supply us milk at the price we the oligopoly say, or we won't buy your milk and you'll be bankrupt in a month or two".

 

Given the intensive competition between the supermarkets, especially in the last few years, is "oligopoly" accurate?

 

Surely it would take much more than "a month or 2".

There clearly is healthy competition throughout the system. Apart from the faming subsidies I suppose. What makes competition between the supermarkets for the best supply different from competition between the farmers for the best customers?

Edited August 12, 2015 by unbeliever

[Cyclone 10]

Its not a favour. Seems to me all farmers are asking for is to be able to sell milk to the supermarkets, 80% of their business, at slightly above cost price. Seems reasonable.

 

That's not how economics works though is it. It doesn't run on favours and what someone deems reasonable.

 

I'd quite like to buy a ferrari at just a little over production value, but I doubt that they'll be reasonable and sell me one for that price...

[TJC1 10]

But is it really under cost price?

 

Dairy farms get EU subsidies which is paid by us so we are already paying towards their profit. The problem is trying to find out how much subsidy they are getting for producing a pint of milk. That money is given to them to actually keep the price low and they are happy to take it.

 

All this complaining about the supermarket prices has been going on for years so how come most are still producing too much milk? Is it because the EU subsidy is paid per acre and herd size?

 

So are these farms actually making an overall loss?

 

Am going on reports. Farmers are protesting so they seem pretty unhappy about something.

[Cyclone 10]

Actually, that isn't true at all and it's not even *really* the supermarkets to blame this time. It's dairy collectives like Robert Wiseman that are. Initially these were setup by the farmers themselves to pool resources and act as a trading block at it's most simple. This allowed them to trade with the supermarkets as they would have a constant supply a small local farmer couldn't guarantee.

 

So, the farmers signed up to these collectives and then the trouble started. Robert Wiseman starting taking a cut of the margins to market and store the milk. The farmers couldn't risk losing supermarkets as their customers so they had little choice but to accept it. This trend had continued with the supermarket paying out a reasonable amount to the farmers but their 'collective' taking most of the profit leaving the actual milk producers shafted.

 

The only supermarket that doesn't use the collective is the Co-op, and as they pay their farmers directly they appear to pay less per litre than say Asda, but if you compared how much of that payment actually goes to the farmer you can clearly see the Co-op is doing it right. Sad they continually get a kicking in the press though huh?

 

So the farmers should set up a new collective, a co-operative style company with a charter not to make (excess) profit, legally lock it down, own it equally and simply cut wiseman entirely out of the market.

[unbeliever 10]

Am going on reports. Farmers are protesting so they seem pretty unhappy about something.

 

Is that what passes for evidence in your world?