Leading article: Not enough money in milk

 

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The question of who is to blame for the milk crisis that saw thousands of dairy farmers descend on Westminster last week has a different answer depending on whom one asks.

The farming community says that a second cut in the price paid by processors such as Dairy Crest and Arla will wipe thousands of pounds off already-slender margins, potentially decimating the industry. Bad news, indeed. Not only do farmers deserve a fair living, but Britain would be a poorer, sadder place without a functioning rural economy.

Meanwhile, however, the processors themselves are also struggling, squeezed between falling global prices for commodities (particularly cream) and the intransigence of their own customers – including, but not exclusively, the supermarkets. Their pain is not mere talk. Dairy Crest slumped to a loss for the first time in 20 years in May; overall sales may be rising, but not of milk.

Then there are the supermarkets. But even as critics allege that retailers are boosting their margins at the expense of farmers, supermarkets point to the steady fall in milk consumption – down by 11 per cent in the past decade – and justify their use of milk as a loss leader with recourse to cash-strapped customers.

Grocers are certainly facing tricky times, with average food spend falling as consumers tighten their belts. And even the National Farmers' Union has been careful to emphasise that not all are at fault: several, such as Sainsbury's and Waitrose, have direct contracts with farmers, paying a guaranteed "fair price".

The situation does not lend itself to an easy solution, for all some farmers' threats to blockade depots, or even pour their milk down the drain, if it is not resolved by the time the price rises are due to kick in, at the start of next month. As the NFU's Mansel Raymond put it to MPs yesterday: the whole supply chain is not working. It is no use looking for a single villain, then. Rather, it is time for a grown-up response. That means better co-operation between farmers, processors and retailers. It also means shoppers accepting they need to pay more for their milk.

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