According to the National Farmers Union it costs 28p to produce a litre of milk but the price paid to Farmers is 25p. That makes milk half the price of many bottled waters in supermarkets (Buxton or Highland Spring, about 50p/litre). Not surprisingly dairy farmers don’t relish the prospect of a 4.00am start for tough physical work, twice a day for a financial loss. Six of the eight in my area have thrown in the towel in the last ten years – plus both of the local milkmen.
There are more factors at work than supermarkets which are driving down prices
There’s nothing new about this trend. Anyone with a reasonable memory will remember the OFT inquiry into allegations of price-fixing between supermarkets and dairy suppliers – but there are more factors at work than supermarkets which are driving down prices.
Two aggrieved dairy farmers lead two (very well-behaved) cows down the aisles of Stafford Asda
July saw the latest skirmish between ‘Farmers for Action’ and Asda, Morrisons, Aldi and Lidl. Protests were staged outside distribution centres and in supermarket aisles. Two aggrieved dairy farmers lead two (very well-behaved) cows down the aisles of Stafford Asda. Farmers elsewhere filled supermarket trolleys with milk before abandoning them at the checkout because “I’ve changed my mind”. That’s a tactic used by 1970’s anti-apartheid campaigners protesting against South African ‘Cape Fruit’ exports.
“Staff call – Clean-up behind the cow in aisle five….”
The good guys are Marks & Spencer, Waitrose, Sainsbury and Tesco. They weren’t targeted because they guarantee a price which covers the cost of production. That message now seems to be acknowledged by the bad guys – Asda, Morrisons, Aldi and Lidl. They have – grudgingly – promised to pay more to avoid negative publicity and the cleanup after a cow in the aisle: “Staff call – Clean-up behind the cow in aisle five….”
Morrisons rep. smugly announced the company was launching a new ‘premium brand’ of milk costing 10p/litre more “to help support British Farmers”.
A hastily-arranged press conference called by Morrisons to announce their ‘Support for UK farmers’ was particularly cringeworthy. The company had initially refused to increase prices but did a swift U-turn after Asda confirmed that it would. The Morrisons rep. smugly announced the company was launching a new ‘premium brand’ of milk costing 10p/litre more “to help support British Farmers”. A journalist asked if Morrisons would still continue to sell their old, cheapo version as well. (Awkward silence from the rep.) So would the Company instead be passing it’s profit on the cheapo brand back to farmers? (A second awkward silence). Or would the company be doing anything apart from giving Shoppers an opportunity to subsidise farmers? This resulted in another awkward silence, the end of the press conference and the end of the Press relations officer.
There is a supply glut of milk because EU production quotas have ended
But the reasons behind the dispute are not as simple as just the supermarket price war. There is a supply glut of milk because EU production quotas have ended. The weather for production has been good and UK production has soared as has the demand from UK consumers. The volume sold has risen by 11% to 5.5 billion litres since 2007 BUT the value of sales has fallen from £3.5bn to £3.2bn.
“It’s the food producers that farmers should be criticising, not supermarkets”
A food industry commentator correctly pointed out: “It’s the food producers that farmers should be criticising, not supermarkets. Only 20% of liquid milk is sold via supermarkets – 80% goes into the food industry. UK production has soared which has driven down the wholesale price but food producers have still been able to find cheaper European supplies. The falling value of the Euro means they can buy abroad more cheaply thanks to the ending of quotas and the Russian ban on milk imports in response to post-Crimea sanctions. Combine the three factors and Europe is floating on milk. That’s the way the EU operates”. It’s a lucky farmer who has a bottled spring water source in his field.
‘Unexpected item in bagging area’
And talking of cows: Seeing a cow at the Asda checkout brings a whole new meaning to ‘Unexpected item in bagging area’. Supermarket assistants have to explain to dimwitted shoppers that sitting a baby in the bagging area triggers the warning and no, the announcement does not mean there’s horsemeat in your burgers. The pinch point for self-service is the speed at which shoppers can be herded through the checkouts (sorry about the pun) so ‘unexpected items’ are not welcome.
The most commonly-heard warning is the voice of former EastEnders actress Helena Breck
The most commonly-heard warning is the voice of former EastEnders actress Helena Breck (AKA Elizabeth Wilmott-Brown). She recorded the message for checkout manufacturer NCR in 2008 but confused shoppers now complain the warning is ‘smarmy and irritating’. Consumer research by checkout manufacturers has suggested alternatives. Those rejected to date allegedly include Joanna Lumley (‘too posh’) Victor Meldrew (‘too grumpy’) and Jimmy Nail (‘totally unintelligible’). The current favourite is Ray Winstone (‘nicely threatening’).