A flurry of media and public comment followed the publication of the Efra Committee’s dairy report last week. The squeeze on dairy farmers is not new, nor unusual. It’s just that the dairy farmers, unlike others, got noisy about it some years back. Good for them. They created the pressure to set up the Groceries Code Adjudicator. But that is not enough. We have a structural problem.
The money in dairy, like other foodstuffs, is made off the land. But if farmers and cows didn’t yield, no one would have anything to syphon off downstream. Rightly, the Efra committee said the Adjudicator’s role needs strengthening. But already dairy voices prophesy the squeeze and volatility will continue when dairy quotas are abolished in the spring.
“Someone out of sight is hurting. We need a new food framework”
No wonder some big retailers are nervous about public sympathy for farmers. Sainsbury’s came clean with an ad last week painting itself on the side of the angels. It stated production costs are 68p for four pints of milk. The ad stated that M&S pays 78p, Tesco 73p, JS itself 72p but Morrisons and Asda pay 56p, and Lidl, Aldi and Iceland pay 56p-59p. Either this 56p group has set itself up as charities or something is not right. This is below the cost of production, or if not, the 56p group should explain how it’s not.
Here lies the reality of the so-called cheap food culture. When consumers pay half or more of their disposable incomes on food, the pursuit of cheaper food is a fine thing. Ask people in Malawi, or anyone who went shopping in 1950 when it was a third or quarter of average British household expenditure. But when average expenditure on food is down to about a 10th, albeit with considerable income group disparities, policymakers ought to be acting.
If we review the total UK food system, the flows down the supposed food chain speak volumes. Defra and ONS record that, of the total £196bn spent by UK consumers on food and drink, precisely £9.2bn goes to farming. That’s 4.6%. Margins and ROCE may be tight but the power lies elsewhere. Someone out of sight is hurting. And that’s why we need a new framework for food and farming. This situation has been normalised but ought not to be normal.
Tim Lang is professor of food policy at City University London