The power in the milk chain
The graph below taken from the DairyCo report Dairy Supply Chain margins 2009/10 http://www.dairyco.net/library/market-information/dairy-supply-chain-reports/dairy-supply-chain-margins-200910.aspx demonstrates not only the fundamental problems in the milk chain affecting farm profitability but also delivering environmental and social benefits in the countryside.
This graphic demonstrates the respective shares of the retail price of a litre of milk received by the retailer (pink), the processor (yellow) and the producer (blue) over the last 10 years.
But it also demonstrates the power in the milk chain:
- retailer dominance of the chain has allowed the retailers to increase their share from 7ppl to 22ppl whilst the producers share has increased from 18ppl to 26ppl
- over the past 10 years the producers share has increased by 30% whilst the retailers share has increased by 300%
- retail price is not linked to the farmgate price
- it’s not just the farmer losing out – the consumer is also being ripped off
This longterm pressure on farmgate price that has led to:
- pressure on producers margins and farm viability.
- the loss of so many dairy farms
- direct impact on farming’s ability to support the rural economy and the environment
It has also led to:
- the increased specialisation and industrialisation of our dairy sector
- the advent of the superdairy
It interesting that CAFFO – the local group opposing the Nocton dairy development – identified this problem and called for the producer to receive 50% of the retail price – as they did 10 years ago