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 Post subject: A milky conundrum
PostPosted: Sat May 31, 2008 1:51 am 
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It is not only fishermen who are protesting throughout Europe. In eight countries, including Switzerland, dairy producers have gone on strike, throwing milk away, according to Reuters (via The Guardian) and many other reports.

The protests started in Germany earlier this week, when upwards of 70,000 dairy farms, out of 100,000, began to boycott dairy processing plants, complaining of low prices, down from their 2007 level of nearly 50 euro cents to as low as 27 to 35 cents per litre. An estimated 10.6 million gallons of milk — up to 60 percent of the country’s production — was dumped, fed to other animals or used for fertiliser on Wednesday alone.

View full article here

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 Post subject: Re: A milky conundrum
PostPosted: Sat May 31, 2008 3:03 pm 
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Most German farmers...not only Milk...feel they're being screwed by the big Supermarket chains; not without some truth, I think. Globally it may well be a different story...but locally, where it hurts, one can hit back locally.

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 Post subject: Re: A milky conundrum
PostPosted: Sat May 31, 2008 3:29 pm 
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permanentexpat wrote:
Most German farmers...not only Milk...feel they're being screwed by the big Supermarket chains; not without some truth, I think. Globally it may well be a different story...but locally, where it hurts, one can hit back locally.



Yes, but ... the supermarkets can only screw they farmers if there is an over-supply. Even with supermarkets, the law of supply and demand applies. If milk was in short supply - as indeed it is at the moment, with the boycott - the price goes up. Processors are paying 40-45 eurocents per litre for the milk they can get - pre-boycott, they were paying as little as 27.

All that begs the question ... what is the cause of the over-supply?

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 Post subject: Re: A milky conundrum
PostPosted: Sat May 31, 2008 6:25 pm 

Joined: Thu Apr 27, 2006 4:51 pm
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It's all the US' fault.
Wonder how many medium farms had contracts to supply US bases,w/all their dependants,with milk? W/the shift a few yrs ago from large bases in Germany to small training facilities and movement of troops South and East,many farmers might have been caught off-guard,thinking someone else would take over the facilities and still buy milk from them. Plus,I wouldn't be too suprised if EU/German subsidies went to farmers who supplied bases in the 80's and never reflected changing realities.(Small farmers w/small amounts of milk cows ordinarily would have considered them too expensive to keep around were encouraged to do so by subsidies.)
I'd be willing to bet the US buyers of milk for bases,PX's,etc. were instructed it was more important to make nice w/the locals than to get the best price. W/this factor driving up prices gone,the Supermarkets would indeed be in a better position to force lower prices.
May not be the real,or even the largest reason,but it may be a contributing factor.
Change something and there are all kinds of unexpected ripple effects. The US Army and Air Force have introduced new wash-and-wear uniforms. One result has been a drastic fall in business for all the local dry cleaners surrounding US bases,many of which have gone out of business. Seems forseeable,but none invloved did,because they just assumed everything would go on as before.


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 Post subject: Re: A milky conundrum
PostPosted: Sat May 31, 2008 8:14 pm 
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Richard writes, inter alia:

Quote:
Yes, but ... the supermarkets can only screw the farmers if there is an over-supply. Even with supermarkets, the law of supply and demand applies. If milk was in short supply - as indeed it is at the moment, with the boycott - the price goes up. Processors are paying 40-45 eurocents per litre for the milk they can get - pre-boycott, they were paying as little as 27.

All that begs the question ... what is the cause of the over-supply?


"....the law of supply & demand applies."

I am no economist...and naive to boot...but that particular law has been consistently & systematically f****d for almost as long as I can remember. If, with the absolute minimal tweaking, it were applied, we would live in a saner world...at least as far as 'food' is concerned.
It's obviously not happening...so, echoing your query...what is?

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 Post subject: Re: A milky conundrum
PostPosted: Sun Jun 01, 2008 9:02 am 
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Milk production is a longterm business. A dairy calf is three years in the making before she comes on stream as a milking animal, so things do not change overnight.

Many dairy farms are locked into annual, or half annual contracts with their raw milk purchaser. So the prices they receive today may well have been set last year. It is only milk (or wheat etc.) traded on the 'surplus market' that is subject to fast fluctuations which reflect supply / demand at any particular time.

But, and this is where this is leading, inputs for next years' feed stuffs and thus the input cost of milk which will be produced next winter and up to twelve months time are being paid for now, and they have trebled in price. Fuel from 30ppl - 70ppl, Fertilizers from £135 / tonne last year to £350 this week with another +£80 on Monday so £425 - £450 / tonne and animal feeds have reflected the recent corn / soya /wheat hykes and dairy feed has also trebled as have energy costs of running a dairying operation. Taken together, the price of profitable milk today was based on inputs last year, but may not cover the inputs needed to keep the supply chain in production for next year and the year after that.


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