Memorandum submitted by PWR and ARA Gantlett
(L17)
1. EXECUTIVE
SUMMARY
The reason the farm gate price of milk is so
low is simple, it is the nature of the product itself. Milk is
a perishable product, produced daily under a system of production
that takes years to establish and is unresponsive to market forces.
Add to this the extremely competitive pressures exerted by the
supply chain that delivers milk and its various processed products
to the consumer. The result is an industry at war with its self
and as ever it's the little guy ( the farmer) who loses.
We need an industry regulator, some one to oversee
the whole milk supply chain, to bring transparency, co- operation
and fairness, to deliver a supply chain rewards investment initiative
and hard work, but most important delivers value to the consumer.
OFFT MILK is not a joke , it's a solution.
2. BACKGROUND
The above summery is very similar to an article
I wrote in 2000 as Wiltshire county chairman of the NFU. In 2000
when farmers first started blockading supermarkets, I became involved
in discussions between a leading supermarket, processor and farmers.
It quickly became apparent how little each knew of each others
business and the suspicion that existed of each other, but the
biggest obstacle to progress was the threat, perceived or real
of the competition commission. The process unfortunately came
to nothing.
3. ALTERNATIVES
Since 2000 there has also been a belief that
the solution lay in the hands of farmers by creating better cooperatives
and buying or building processing capacity. Three years of activity
has failed to deliver any benefit to farm gate prices, it has
however benefited a few accountants dealing in insolvency!
4. HOW COULD
IT WORK
A regulator should not and could not set a farm
gate price of milk, but it could establish what that price should
be, and if the market can deliver it. We need a fairer distribution
between farmers the current 4-5 pence differential is not sustainable
and is divisive.
A regulator could over see greater vertical
cooperation in the supply chain the implementation of fairer contracts
that can lead to more investment and greater efficiency.
I see no reason to require legislation to in
act this position, as the whole industry is sick of the current
situation I am sure all sides would willingly cooperate. Funding
could be from the MDC or similar small levy on producers.
The regulator themselves should quickly establish
if they required more rigorous powers and could seek them from
appointing body Defra.
January 2004
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