Milk Matters

I know that my regular readership, Thomas that means you, have been missing my updates on the state of the milk market. Imagine my delight this week when Private Eye had a column devoted to that very subject. It put to rest some myths that have long been pedalled by dairy farmers.

Firstly the contracts offered by supermarkets for milk are some of the best in the industry, the real problem is the low price of milk used for making cheese, butter, and milk powder have been dropping because of a worldwide collapse in demand.

Next it is an incredible rise in productivity that not helping the dairy farmers, the average cow now produces 2000 litres of milk a year more than it did in 1998. This is a rise of about 40%, largely because of automation that more effectively regulates diet and means that the animals are less prone to disease.

So if we assume for one moment that demand is static economics would say that we need 40% fewer cows to produce the same volume of milk. Essentially the market is forcing farmers out of business until supply equals demand when prices will stabilise and potentially rise again.

So let us look beyond the simple supermarket bashing that in this case may only be part of the story. Unfortunately it is the farmers who invest in automation who are winning. It may sully our view of Daisy chewing the cud in a rural idyll, but it is a fact. For you Archers fanatics it is the difference between Berrow Farm and Brookfield. Now I cannot possibly comment in which environment the cows are happiest, I will leave that to you dear reader.