Sad cows

In a gloomy MOO…d

Britain’s rubbish summer is not just affecting people.  Cows are fed up too: according to this morning’s R4 Farming Today, the wet weather is putting cows off their oats, so to speak.  Less amorously-inclined cows this year mean fewer calves next year, and reduced milk yields.

It’s not all bad news for cows though.  Yesterday supermarket group ASDA announced it would not go ahead with its price reduction for UK dairy farmers (it is not clear at this stage whether Morrisons and the Co-op will follow).

The determination (of some) of the big supermarket chains to pay less to farmers for milk mystifies me.  Yes, the economics of farming (with complex subsidies and the EU’s CAP regime) are murky.  But paying farmers less for a pint of milk than it costs to produce is clearly unfair.  PR-wise, the supermarkets put themselves in an indefensible position.

Economists can argue that the supermarkets are acting rationally, and that farmers who cannot operate under the low-price regime should shut up shop.  In the Telegraph blogs, the Adam Smith Institute’s Tim Worstall says “the falling price of milk is a sign that some [farmers] need to quit.”  You could see this as a courageous attempt to challenge popular opinion and go against the grain.  But I suggest it shows a blindness to the big picture.  What about the role of dairy farmers in food security or protecting the countryside?  There is more to this issue than narrow calculations of efficiency.

When you’re in a hole, stop digging.  To recover their reputations, the supermarkets need to reverse the cuts as soon as possible.  The farmers have won this one.  They mobilised popular support by making this issue simple: it’s about fairness.  Attempts to argue otherwise look mean-minded and hand a freebie to the anti-supermarket lobby.

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