Thursday, 21 August 2008

Cheap Food vs Food Security







Anonymous said...

I am an urbanite (or rather, I live in a rural area, but have no connection with the agricultural sector) so I'm largely ignorant about this, but what I'd like to know is why the farmers don't co-ordinate their sales far more effectively than they appear to do.

It seems as if there is some co-operative action going on (and to which you refer) but if you suggest that the supermarkets can still pit suppliers against one another then it would seem much more is needed.

It strikes me that this is a legitimate market response to the very strong buying power of the big four supermarkets. If we baulk at the idea of one singe farmer's co-op on competition grounds, why not simply set up three or four? That would represent as much competition as the authorities seem content with in the retail sector, and farmers would still be free not to join any if they wished.

Farmers shouldn't hide behind arguments of social or environmental detriment. If they are being outbid in the marketplace they need to change the terms of trade in their favour. The bottom line of any co-op should always be: no milk sold at below gate prices.

John Dixon said...


All milk used to be sold through a national organisation, the Milk Marketing Board, which set more or less standard prices. It was abolished as being too much of a monopoly, and since then, the power has passed into the hands of the large supermarkets.

The farmers are all small players, and they are in competition not just with each other, but with cheap supplies from abroad. It makes apparent economic sense for the supermarkets to buy from the cheapest source, even if the result is a reduction in capacity in the UK. But I believe this to be a very short term viewpoint.

Worldwide demand for foodstuffs is increasing, and over a period, the market prices will therefore increase. We need home production, but short sighted economics are in danger of losing us that capacity, and making it difficult and costly to recover when needed.