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Milk Wars: Does the BRC have a point?

20 July 2012

The dairy industry is striking back at what it sees as unfair treatment by the supermarkets (three in particular). But those who don't read the fine print may want to pay heed to some of the soundbites coming out in defence of the retailers. Read our summary and decide for yourself.

Let's look at the facts:

Fact One: According to statistics, the cost of a pint of milk exploded in 2008, which was around the time the recession started to take hold in the UK. Between 1991 and 2007, the cost of a pint hovered within a margin of error of 5p (being priced at between 32p and 37p), but in 2008, that accelerated to 42p a pint, and has now gone to 46p.

Fact Two: Supermarkets - more particularly Asda, Morrisons and the Co-operative - have cut milk prices, and passed these cuts on to their suppliers in the dairy industry. Waitrose, Tesco, Sainsburys and M&S are not involved because they buy milk directly from the farmers.

Fact Three: Outraged dairy farmers - in the form of the Farmers for Action (FFA) - have decided to strike back by launching blockades and generally making their presence felt around the offending supermarkets. They argue that farmers will be put out of business and imports will then increase. As a last resort, farmers are threatening to pour their milk down the drain. Their high profile supporters include celebrity chefs Jamie Oliver and Hugh Fearnley-Whittingstock.

Fact Four: The British Retail Consortium (BRC) has put forward an intriguing fact that the man on the street may not be aware of: 11 of the 12 best paying customers for milk are paid by supermarkets, which are under a lot of public scrutiny. If that central fact is true - and there is no reason to believe it is not - it puts a whole new angle on the story, particularly as supermarkets may make up less than 50% of those who buy milk from farmers.

Here is the BRC's statement in full:

"Retailers have robust and resilient supply chains and customers have no reason to think they won't be able to get the milk they want as a result of these protests.

“Supermarkets are the wrong target. They’re actually the best payers for milk. Currently, 11 of the top 12 best paying milk contracts are contracts paid by supermarkets.

“But supermarkets and their customers don’t need all the milk produced by UK dairy farmers. Only half of the milk they produce ends up as liquid milk in bottles and cartons and only part of that is sold in supermarkets, the rest is sold by convenience stores, door-to-door or used in catering, schools and prisons.

“What we don’t see is protesting farmers questioning the amount that the other big buyers of milk, who include manufacturers and the public sector are paying and calling on them to show the same strong support for the industry that retailers do."

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