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From the editor: Dairy's boom and bust is height of dysfunctionality

If the British dairy sector is going to prosper longer term then its game of ’follow the leader’ has to stop.



As consumers were told last week by the Arla chief that butter and cream would be rocketing in price by Christmas, the industry found itself in the national media headlines and even the front page of The Sun.

 

It must have been a quiet week for reporters, I guess.

 

But as the red tops and local press made a meal out of the content and took a tongue in cheek approach to the issue, the wider joviality masked an industry which struggles to operate in a functional manner when it comes to the relationship between processors and suppliers.

 

After all, dairying is facing shortages because of the brutal cuts processors have made in recent years and what farmers feel has been the reluctance to pass rising returns from assets such as butter and cream back to the farmgate.

 

And where Arla leads, others usually follow. If it raises the price, then others raise their price, and likewise when the sectors is on the downward price curve.

 

Surely processors know the demands on their own businesses and can set accordingly, rather than using Arla as a barometer of trade, as many farmers feel they do.

 

More widely, and as John Allen and Chris Walkland rightly stress this week, the inability of dairying to regulate its own supply and demand scenario is almost laughable. Instead, processors communicate a cooling market via the not so subtle mechanism of price cuts, and farmers react accordingly.

 

However, this lack of foresight then leads to the would-be shortages we currently face, then to rising farmgate prices, and then no doubt to the market busting after farmers pile on cows and litres.

 

It would be hard to find any farmer happy with the cycle of boom and bust; it’s just a shame no one in the sector seems to have a plan to bring this to a timely end.

 

And finally, huge plaudits to Morrisons for backing British meat for its stores. Those that use New Zealand lamb and claim they can not find in season British products need outing for their lack of support and honesty.

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