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Will Corbyn/Labour’s industrial strategy guarantee fair production costs for perishable food – or rely on the global market?

“It is simply not right that any worker should have to sell their product for less than it costs them to produce them, and this is acutely felt by dairy farmers.”

Countryfile, reviewing Jeremy Corbyn’s “Rural Renewal” report, continued to quote: “A combination of a small number of very large milk processers operating as suppliers to retailers, supermarkets operating a ‘price war’ forcing down the cost of milk, and milk co-ops losing their power has resulted in thousands of dairy farmers finding it harder and harder to make ends meet, let alone make a profit.”

Corbyn said “we will work with all parties to ensure that customers are offered a price they can afford for their milk, but not at the expense of farmers whose very livelihoods depend on it. This will include investigating regulating supermarkets to prevent below cost selling.”

Factories don’t sell their products at a loss, but those producing perishable food are often required to do so. It’s so easy to put pressure on those producing perishable food: fresh milk, fruit and vegetables, who have to sell quickly – in effect holding them to ransom.

Seven years ago Telegraph View pointed out that some supermarkets pay less for milk than it costs to produce. Nothing has changed! Prices sometimes drop to the 1990s level but all other costs have risen steeply.

Confidence in successive governments continues to fall as the country has become increasingly dependent on imported food – which now even includes tomatoes from Morocco and eggs and poultry from Israeli settlements in the occupied Palestinian territories.

A Fairtrade Policy Director noted that ‘The unpleasant and aggressive tough love lobby’ which has cut social and healthcare, education and public transport doesn’t spare family farmers

Corbyn on a Cumbrian farm, pledging to do “everything necessary” to stop no-deal Brexit carnage for famrers

No thoughts of love – or natural justice – appeared in the Oxford Farming Conference address of Liz Truss, Secretary of State for Environment, Food and Rural Affairs, who blamed the ‘difficult world market’ for low milk prices and focussed on farming’s ‘huge export potential’, rejoicing that ‘we now grow chillies which we export to Pakistan and Mexico’.

Barbara Crowther (right), by far the best Fairtrade Foundation Director of Policy & Public Affairs (2009-2017), said “There is a very unpleasant and aggressive tough love lobby out there who simply do not understand the importance of locally sourced food and the underlying food security issues which are only going to get worse as the global population grows”. She asked “Could we make our Mark work on milk?”. This link to that (now unwelcome?) reference has been removed.

It’s a fair question and is something that has been looked at, and discussed many times – not least as part of a ‘Local and Fair’ conference a few years ago, bringing Fairtrade and Cumbrian farmers groups together to discuss the issues they hold in common, co-ordinated by Joe Human (see Barbara in video at that conference).

MP Anne McIntosh (below, who chaired the parliamentary Environment, Food and Rural Affairs (EFRA) Committee, for several years, urged the Government to intervene, after it was reported that 60 dairy farmers went out of business in one month alone. EFRA wanted the Groceries Code which covers suppliers to the big supermarkets and retailers, to be extended to include dairy farmers – but soon afterwards, the estimable Ms McIntosh was deselected. Now in the Lords she is campaigning for the farming interests threatened by Brexit

https://www.thestar.co.uk/news/politics/anne-mcintosh-trade-eu-vital-our-farmers-62385

The Royal Association of British Dairy Farmers insists that all supermarkets could pay dairy farmers a price for milk that would meet the cost of production without increasing the price charged to the consumer: they would just need to accept a slightly lower profit on the milk they sell.

Placing the issue third after Angora goats and use of level crossings, the BBC, in a video link no longer working, gave priority to the destructive comments of the establishment economist, Sean Rickard.

Apparently unaware of economic interdependence – the knock-on effect to other industries and the rural economy – Sean Rickard tells farmers that if they can’t manage under these conditions, ‘they should give up making milk and live off the subsidy’.

In fact, as Clitheroe dairy farmer Kathleen Calvert often points out, the whole rural economy is affected as farmers lose income. Each working dairy farm returns a huge amount of money back into the wider economy, supporting many other regional businesses, and therefore helping to provide jobs for many. Each dairy farm that ceases to trade has a knock-on effect on the surrounding community and the economy, due to a loss of income to many other businesses. From press release, link no longer works. Instead see a briefer reference in Lancashire Life.

The key message “We are losing hold of a vital skills base at an alarming rate as dedicated dairy farming families are no longer financially able or prepared to work at a continual loss. We believe that many milk buyers gamble with the continuity and security of the UK milk supply by keeping much of the profit further up the market chain. Despite varying business structures and the importance of food production, most farm gate prices are now lower than production costs. This has a knock on effect on a wide range of other businesses and livelihoods of countless people involved, ultimately leading to pressure on incomes”.

Dairy farmers are compelled to pay a levy to DairyCo/AHDB, a body set up by government, which, consultant Ian Potter (above right) notes, has received – and spent – more than £1 million extra as a result of the increase in production. He asks: “But on what? Cynics say it spends the money on encouraging more production because that generates more levy money for it…and so on!” He continues: “In my opinion we now need a campaign to promote the buying of British dairy products using British milk . . . I have heard one Tesco farmer would prefer to give his levy to Tesco if he could to help it promote British milk. That makes sense to me if DairyCo won’t!”

Meanwhile food imports rise and government ministers advise hardworking farmers to place their ‘commodities’ on the global market so that unproductive internet bound speculators can ‘make a killing’ – nowadays more often crouched over their computer screens.

 

 

 

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MP Jeremy Corbyn calls for fairer prices for small farmers: will he go a step further?

As supermarkets insist they give a good price to the middlemen – processors – both deny responsibility for the fall in average price farmers receive for a litre of milk in the UK by about a quarter to 23p from almost 32p in mid-2014 – see today’s Financial Times. The FT continues: “About 260 of the UK’s 12,000 dairy farmers have sold their herds since January . . . many farmers are ‘out of pocket’ with the cost of production averaging about 30p a litre”.

Speak out at your peril

milk farmers leaveIn January a linked site reported that, as 60 dairy farmers went out of business, the parliamentary Environment, Food and Rural Affairs (EFRA) Committee, chaired by Anne McIntosh, urged the Government to intervene. It wanted the Groceries Code which covers suppliers to the big supermarkets and retailers, to be extended to include dairy farmers.

She was deselected.

State radio debunks the issue; EFRA minister Liz Truss, let them grow chillies, natural justice not on the agenda

No thoughts of natural justice appeared in the Oxford Farming Conference address of Liz Truss, Secretary of State for Environment, Food and Rural Affairs, who refers to ‘the huge export potential of this industry’ and rejoices that ‘we now grow chillies which we export to Pakistan and Mexico’.

Placing the issue third after Angora goats and use of level crossings, the BBC gives priority to the destructive comments of the ‘sympathetic’ corporates’ economist, Sean Rickard, who tells dairy farmers that if they can’t manage under these conditions, ‘they should give up making milk and live off the subsidy’.

Arla processor blames the global market

Ash Amirahmadi, head of milk and member services at Arla, dairy middleman, dismissed attempts by the NFU to target retailers’ margins and blamed the farmers’ plight on the drop in the global milk price.

The knock-on effect to other industries and the rural economy

jeremy corbynThe Western Morning News reports that in an interview for BBC Radio 4’s On Your Farm programme, Princes Charles said: “I happen to think the small farmer, the smallholder, is absolutely crucial to the maintenance of food security . . .”. Jeremy Corbyn agreed: “There are some big issues to be tackled about how big supermarkets squeeze small farmers, and how this can knock on to the wages of agricultural workers or producers in sectors such as the baking industry . . . it is clear that something needs to be done to make sure that supermarkets pay fairer prices to small farmers without passing that on through higher prices for consumers.”

Economic interdependence

In fact, as a Lancashire farmer often points out, the whole rural economy is also affected as farmers lose income. Each working dairy farm returns a huge amount of money back into the wider economy, supporting many other regional businesses, and therefore helping to provide jobs for many. Each dairy farm that ceases to trade has a knock-on effect on the surrounding community and the economy, due to a loss of income to many other businesses. See press release.

Producers of perishable milk fruit and vegetables should learn from industry and combine

jc logoFactories do not sell their products at a loss, but those producing perishable food are often required to do so. Will vulnerable food producers ever learn from industry and combine? And would Jeremy Corbyn be prepared to enable and support this?

If not, what hope is there for those who produce perishable food?

UK dairy farmer reflects: “the army of consultants and advisers can walk away leaving producers to pick up the financial pieces”

 

Coverage of advisers and consultants on this site to date has included posts called: Consultancies: a viral pandemic and The ultimate corporate-political nexus: McKinsey, ‘Jesuits of Capitalism’, and Her Majesty’s Government.

 

The dairy farmer remembers that Jim Begg, Dairy UK’s Director General, advised that the future for Dairy was bright. This encouraged many progressive family farmers to invest in the future of the UK Dairy Industry. They then found the rug pulled from under them as Mr Begg failed to encourage processors to invest in gaps in the UK market preferring instead to pocket producers’ income to cover weak selling and prop up their losses, steadily asset-stripping from efficient and well invested small and medium sized dairy farm businesses across the UK. This impacts heavily on the wider rural economy as farmers battle with cash flow, lacking reasonable income from the supply chain to pay essential bills and replace essential kit.

Though the market was in the producers’ favour, UK farm gate prices languished at the bottom of the European price league tables, while the fun-loving Mr Begg dallied in foreign places with his “European counterparts” who swiftly filled the gaps in our valuable market and have raced ahead of the UK globally. Has Mr Begg used cover of Dairy UK to hand UK dairy farmers business on a plate to Europe while ensuring his own “global” position advising an Australian organization similar to Dairy UK how to run their operations, and evaluating economic surveys for the worldwide dairy industry etc?

In an unstable supply chain where financial power leans heavily in one direction, and one maximises their margins by denying another other of income, the army of consultants and advisers can walk away leaving producers to pick up the financial pieces.

Retailers must pay a fair price for all their dairy produce with a fair amount passed back to producers

Mr Begg implies when considering regulation or free market, the priority is not ensuring sustainability but becoming rich. He also says we have to remain unswervingly with the focus that we are a consumer, and not a production, led industry.

We are neither. Uninformed consumers are led by extensive retailer PR into buying whatever retailers choose to supply them. Contrary to what we are led to believe, large retailers do not practice fair trade, and where the pied piper led, the unsuspecting willingly followed.

Farmers must specialise within the supply chain in looking after their animals and their farms and producing milk. Any value must be added by specialists at the processing stage, and the retailers must pay a fair price for all their dairy produce with a fair amount passed back to producers.

With Mr Begg at the helm, retailers will always manage to retain excessive margins

UK producers are seeing the worst farming conditions for many years, with appalling summer and autumn weather, milk yields and cull cow prices plummeting as winter feed supplies are scarce, prices are sky high, the suicide rate is the highest of any other sector, work related injuries have increased, and RABI reports steep rises in producers suffering financial difficulty with spiralling costs and cash flows under incredible pressure.

What became also of the cool, rational debate that Dairy UK talked of when Mr Begg’s resignation was called for? Like a true professional he laughed it off and ridiculed his critics in the same way he smiles yet throws his dummy out whenever anyone dares disagree with him.

Corporates control of the lucrative dairy supply chain; while publicly proclaiming support for UK dairy farming, retailers:
  • take advantage of voluntary adjudication,
  • threaten weaker processors with breach of contract as milk supplies plummet,
  • divide and rule producers,
  • and increase retail prices to consumers, fixing blame for the rises on UK producers while having paid no more for already contracted supplies and thus forcing another invisible cap on prices paid to non-aligned producers.

If steadfast UK non-aligned dairy farmers and smaller processors are forced out of business the corporates will have total control of the lucrative dairy supply chain and remaining “dedicated suppliers” will be left to face the inevitable squeeze. The milk that draws consumers will likely become a luxury item for most while available at a price, albeit still the lowest, in large supermarkets.

However much the public prefer celebrity to reality, and want high-welfare, well-maintained and professionally managed farms, it does not leave efficient non-aligned UK farmers on a level playing field with countries where production standards and major costs such as land, labour and energy may all be much lower, and it does not pay the bills.

Highly paid adviser runs no risk, unlike producers

Mr Begg, with no risk or financial investment required, commands a salary and lifestyle far removed from that of the producers he represents, often appears to undermine them and others who speak out in support of producers, in his weekly blog.

Collaboration seriously damaged the producers’ interests

He says collaboration, and not confrontation, will definitely win in the end, extolling the virtues of TV celebrity advice not to ‘fan the flames of controversy. But if producers and consumers had kept not their commanders and generals on their toes by gently fanning the flames of controversy in their direction, instead of allowing them to collaborate so brazenly with the giant corporates for so many years, we may not now be faced with the back draft that resolute UK dairy producers are now fire fighting.

The dairy farmer’s conclusion:

Continued support from the Dairy Coalition, the farming press, allied trades, other supporters like the WI, and outspoken individuals is vital if we are to beat the raging fire that threatens to destroy our UK dairy industry.

Will they be successfully undermined by those organisations or individuals like Mr Begg, Dairy UK, or Promar who may well have their own or conflicting interests uppermost?

In the interests of the country’s food security and the rural economy, we hope not.