Milking it: As supermarket price cuts leave a sour taste for dairy farmers, is it time to bring in the adjudicator?

 

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The Independent Online

Scanning the dairy aisle, a shopper sees no sign of woe. Fresh milk arrives daily and every few days it seems to get cheaper. Iceland was the first to slash four pints to 89p last year; Asda followed suit; Tesco and Sainsbury’s – whose market share continues to fall as discount rivals grow – have since engaged in price wars that have driven milk to such lows that anyone tempted to follow Cleopatra’s example, and fill a bath with the white stuff, could do so at no great stretch to the family budget.

The cost is being felt elsewhere. Two days ago, dairy farmers used tractors to block traffic on the A50, protesting against their treatment by the supermarkets, in whose milk battle they have become the collateral damage.

The rate farmers attract for their milk has fallen four months in succession. Each week a few more farms, mainly in the South-west and North-west of England, go bust. The number of British dairy farms has halved since 2002.

Such decline cannot be explained solely by the greed of Aldi, Lidl and co. For years British dairy farmers have had to compete with global counterparts. When New Zealand enjoys a bumper season – as this year – prices drop worldwide. Global milk prices took a hit, too, from Russia’s import ban last year, in response to sanctions, and slowing demand in China.

Worse for farmers in Devon and Cumbria is the prospect of EU reform: quotas on milk production will be lifted later this year, creating a totally free market. Few can happily stomach the challenge. We are a long way from the industry whose working parts consisted of a stool, skilled tweaking at an udder and a pail to catch the results.

None of this is to absolve the supermarkets, however. They have exerted unreasonable pressure on suppliers – many of whom are unwilling to complain for fear of losing business.

There are two possible avenues of redress. First, shaming exploitative supermarkets and, by the same principle, encouraging customers to part with a few more pence. If few customers noticed the tractors on the A50 this week, more may soon get the message. David Handley, the chairman of Farmers for Action, proposes to gather dairy farmers at branches and make their plight not only visible to shoppers but impossible to ignore. The best that can be hoped for here is a retreat on the part of brands that do not base their total appeal on price.

The second option is to bring in the Groceries Code Adjudicator and governmental muscle. Earlier this year the GCA was granted power to fine supermarkets up to 1 per cent of their annual turnover if wrongdoing is discovered: its remit should now be extended to cover more dairy farmers and an investigation launched into whether any supermarkets have abused their power over farmers. More could also be done to group farmers together so they wield more clout in negotiations. Clearer labelling on British-produced milk might also give a twinge to shoppers’ consciences.

Ultimately, the picture will remain bleak for farmers. While they can stay afloat, the Government owes them more protection, and shoppers, perhaps, a second thought at the checkout.

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