The mayhem in the market for milk
Franks, J.
The mayhem in the market for milk - 2003 - Farm Management 11(7) January 2003, 459-480(12) .
Recent trends in milk prices show that the average farm gate milk price as often failed to fully reflect the 'liquid milk price premium'. For long periods the farm gate price did not even represent the equivalent milk price for butter and skimmed milk powder valued at world market prices (AMPE). The need for supermarkets to launch milk price initiatives appears to confirm the market's failure to return a sustainable milk price. Farmers need marketing strategies that redress the market's failure and strengthen their negotiating power. If investments in new, low cost manufacturing plant are supported, the extra competition for milk should raise milk prices to at least its manufacturing value. But for these investments to capture a share of the liquid milk price premium, the farm gate-manufacturing price squeeze must not be replaced by a manufacturing-supermarket price squeeze. A regulator could use the excuse of market failure to reintroduce 'end-use pricing'. But in the meantime three recent market led initiatives and monitoring of retail prices by dairy farmers may help reconnect the UK farm gate milk price with its end-use value.
MILK PRICES
MILK PRODUCTION
FARM-GATE SALES
SUPERMARKETS
MILK MARKET
The mayhem in the market for milk - 2003 - Farm Management 11(7) January 2003, 459-480(12) .
Recent trends in milk prices show that the average farm gate milk price as often failed to fully reflect the 'liquid milk price premium'. For long periods the farm gate price did not even represent the equivalent milk price for butter and skimmed milk powder valued at world market prices (AMPE). The need for supermarkets to launch milk price initiatives appears to confirm the market's failure to return a sustainable milk price. Farmers need marketing strategies that redress the market's failure and strengthen their negotiating power. If investments in new, low cost manufacturing plant are supported, the extra competition for milk should raise milk prices to at least its manufacturing value. But for these investments to capture a share of the liquid milk price premium, the farm gate-manufacturing price squeeze must not be replaced by a manufacturing-supermarket price squeeze. A regulator could use the excuse of market failure to reintroduce 'end-use pricing'. But in the meantime three recent market led initiatives and monitoring of retail prices by dairy farmers may help reconnect the UK farm gate milk price with its end-use value.
MILK PRICES
MILK PRODUCTION
FARM-GATE SALES
SUPERMARKETS
MILK MARKET