Supermarkets milk the system for all it’s worth
Carlo Morelli explains how milk is both too cheap for farmers and too expensive for us, thanks to retail bosses skimming off profits
Still from video of farmers' milk protest
They are right to be angry at retail bosses cutting the prices they receive for supplying milk. But they are wrong to suggest we should pay higher prices.
Increasing the price of milk in supermarkets passes the blame for the crisis of the food system onto working class people so that dairy farmers can boost their income.
Average household expenditure has been falling since 2006. We can’t afford to pay more for food.
The blame really lies with the large-scale retailers that have increasingly dominated control over the food sector.
Four firms dominate the sector with over 80 percent of the market share.
They invested in new large formats to dominate the market and boost profits.
Control
And they sought to maintain this control by expanding into non-food and internet retailing.
So Tesco sold food, clothes, electrical goods and even insurance, before becoming Britain’s largest internet retailer.
The food retailers also sought to generate more profits by expanding into global markets. New firms entered the market to gain a share of these profits.
The world’s largest retailer Walmart bought Asda in 1999.
And European multinationals Aldi and Lidl competed over price.
But profit margins have been continually under threat—resulting in repeated crises within the food sector.
One response by the retailers has been to put pressure on suppliers to lower prices.
Repeated food scandals have been created by this squeeze in prices paid to suppliers.
Large multinational food producers and smaller scale producers, particularly in the livestock industry, took dangerous shortcuts to maintain profits.
The result was that shoppers bought products infected with the deadly BSE disease, and more recently why drug-tainted horsemeat was passed off as beef.
One reason why the National Farmers Union (NFU) promotes demands for higher food prices is because they seek to speak for big business in farming.
The NFU is not a trade union—it is a lobby group of big business.
Class
It ignores the fact that there is a strong class distinction within the farming industry.
Over a third of farmland is farmed by tenant farmers with little control over their farming.
Large, absent landowners simply seek to generate rent from their land, irrespective of the longer term implications for the food production system.
As a result there is little incentive to farm sustainably within British farming.
Only by direct subsidies can farmers be persuaded to stop destructive practices.
That means we end up paying high prices for food through direct payments in our shops, as well as indirectly through payments to large landowners.
The answer to the crisis is greater control and regulation of the food production industry—not making consumers pay still higher prices to big businesses.
Instead of protests for increasing milk prices, farmers’ protests should call for nationalisation of the food industry and higher wages for working class people.