Tuesday, 11 August 2015

Say Cheese & Milk

Saw an advert for a McDonald's BBQ Smokehouse Burger on TV the other night. At one point they were at pains to point out that it contains matured cheddar cheese, backing this up by showing some aged rounds of real cheddar, but then quickly switching to the above named burger, resplendently garnished with limp slices of some orange lipid which in no way could be described as mature cheddar cheese. Couldn't even be describer as cheese.

Milk prices. Apparently the cause of the farmers' problem with pricing is world oversupply combined with our spat with Russia, meaning poor export markets for British milk, The law of supply and demand dictates that if there's oversupply then prices must fall as a consequence. Sad, but that's the law of the market - except of course when it comes to the CAP. I'm not sure what effect the CAP has on milk these days, but we were all against the CAP a short while ago, especially when it favoured inefficient French farmers.

I'm not generally in favour of artificially inflating prices for items in contravention of the laws of supply and demand. If there are too many dairy farmers, then perhaps we should let the market take its course. Under-supply will increase the price, but perhaps concentrate production into the large mega-dairies with massive benefits of scale, which also has its downside. When the market for ships left the UK for Korea and Japan and the market for steel moved to India, no-one guaranteed to buy ships or steel at inflated prices to keep shipyard or steel workers employed. Should dairy farmers be treated any different?

The usual response to falling prices is to add value and charge for the added value - in this case cheese, butter and other milk products (blessed are the cheese makers) and some are doing that and keeping their heads above water. Butchers have been doing it for decades by selling ready-marinaded or prepared meats that you pay through the nose for but (allegedly) save you a lot of effort.

Imagine feeling sorry for every producer or manufacturer in a market suffering a glut. Good idea to protect jobs (perhaps in the short term) or false economy in the long run? Answers in the usual position.

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