Friday, June 26, 2020

Don't resurrect the milk marketing board

Some dairy farmers have been hit hard by the slump in the liquid milk market after restaurants and cafes entered lockdown.  Some more milk was consumed at home, but not enough to make up for losses in the catering sector.  Some emergency help has been given to dairy farmers by the Government, but it has been criticised for not hitting the spot:https://www.nfuonline.com/sectors/dairy/dairy-news/dairy-response-fund-opens-for-applications/

Some farmers have been agitating for the return of the Milk Marketing Board.   The story of its demise is a bit more complicated than has been made out, e.g., in Private Eye..  It wasn't just down to the wicked EU - who rightly saw it as a state sponsored cartel.    Mrs Thatcher didn't like it, but Peter Walker defended it in England so the Scottish boards went first.

However, its demise was also favoured by the bigger dairy farmers who felt they could extract a better price if they weren't compelled to sell to a monopoly.   Remoter, smaller farmers tended to favour it because it ensured that they did have a market for their milk.

I wrote more about milk marketing than was good for my sanity, but here are a few key points:
  • The price for manufacturing milk varied according to its final use, e.g., chocolate crumb v. yogurt. The milk supplied wasn't any different, but the price for manufacturing milk was lower than for the liquid market (roughly half of total output).  It's as if you charged more for steel if it was used in a Jaguar rather than a mini!
  • Prices were determined by the Joint Committee in which each side - farmers and processors - had one vote.
  • The franchise for the elections to the board rested with the cows, ten cows got one vote - the idea was to give bigger farmers more of a say.   Concerns about 'bovinisation' led to them being counted through occasionally.
  • A big bureaucracy was necessary to operate the system.  Nice people, but as soon as they saw you expressing an interest, they tried to coopt you to their way of thinking.  They had the most to lose from dissolution.

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