How fascinating

So, milk production quotas are over. Some talk of a looming price war:

However, an NFU spokesman dismissed claims shop prices would fall much below the 49p a pint today.

There would be “no impact whatsoever” on milk prices for consumers, a spokesman added, saying people “won’t see any changes on the supermarket shelves”.

That’s an interesting statement, isn’t it?

45 thoughts on “How fascinating”

  1. Well, perhaps we should introduce price controls to prevent… Laffer Curve… something something…

  2. Think of all the EU and UK civil servants who used to administer it. All now out of a job and all that taxpayer money saved!

    What do you mean, I’m a day too late?

  3. He might be right if – as I think I’ve seen argued on here – the value of a 49p bottle of milk in a central London supermarket at 8am on a Tuesday is largely made up of the logistics to get it there, not its production by a cow in rural Dorset.

    In fact, I think the NFU guy is probably right, but if he thinks it’s all about the supermarket ripping off everyone and gobbling up excess profits, he’s inadvertently right.

  4. Surprised you haven’t picked up the typo on the first paragraph. Abolition of milk quotas apparently affects the price of diaries… What?

  5. I read the other day that something 75% of the worlds adult population are latose intollerant. So if this increases milk production, just who are we going to export the milk, cream and cheese to?

  6. Can’t bear the stuff. Amazed I used to drink it when I was a kid. As for the smell of it in coffee – revolting…

  7. There is definitely a ratchet effect with food prices in store vs commodity food prices. Generally speaking as commodity prices rise, store prices rise immediately, as the manufacturers and retailers just pass on the extra cost of production, but as commodity prices fall, the store price is more ‘sticky’ as everyone in the chain attempts to raise margins by keeping some of the higher price as extra profit. Store prices do slowly drop, but rarely back to the original position. Hence one suspects that the NFU is right – whatever price war may break out in milk commodity prices as result of milk quota abolition, the consumer will see only small part of the benefit, if any.

  8. Rob-

    I’ve been unable to consume it since spending some time in the early 90s working on a milk bottling production line. The stench of milk has made me feel ill ever since.

  9. So Much for Subtlety

    Salamander – “So if this increases milk production, just who are we going to export the milk, cream and cheese to?”

    Let’s see if I can unify one or two threads by saying the only sensible way to keep the price where it is, much less to raise it for the farmer, is to 1. improve animal welfare or 2. find a new use for milk.

    I might be in favour of the first. Depending on what steps are taken. But the other solution is to find some other use for it given the Chinese are unlikely to be taking to milk any time soon.

    I suggest making plastic bags and bottles out of it. You can make plastic from milk and presumably Greenies can’t object to it as it is perfectly natural and bio-degradeable. What’s not to like?

  10. Once production quotas are out the way then it’ll just be “regulated” via the futures market, we all know that historically government intervention normally achieves very little and at worst can cause chaos, so why would the price change that much.

  11. Bloke in North Dorset

    Salamander
    April 2, 2015 at 9:49 am

    I read the other day that something 75% of the worlds adult population are latose intollerant. So if this increases milk production, just who are we going to export the milk, cream and cheese to?

    Was it do do with this interesting paper that the Economist covered last week?
    http://link.springer.com/article/10.1007%2Fs10887-014-9109-5

    This paper argues that a genetic adaptation to the Neolithic Revolution led to differential levels of development in the precolonial era. The ability to digest milk, or to be lactase persistent, is conferred by a gene variant that is unequally distributed across the Old World. Milk provided qualitative and quantitative advantages to the diet that led to differences in the carrying capacities of respective countries. It is shown through a number of specifications that country-level variation in the frequency of lactase persistence is positively and significantly related to population density in 1,500 CE; specifically, a one standard deviation increase in the frequency of lactase persistent individuals (roughly 24 percentage points) is associated with roughly a 40 % increase in precolonial population density. This relationship is robust to a large number of sample specifications and potentially omitted variables.

    Its quite an interesting idea.

  12. But the other solution is to find some other use for it given the Chinese are unlikely to be taking to milk any time soon.

    Chinese demand is going through the roof: they are investing in Australian farms.

  13. @Bloke in North Dorset

    But lactose intolerance doesn’t necessarily mean intolerance to cheese, as far as I understand it. Cheese consumption (and invention) seems to have come first.

    Cheese production gets rid of most of the lactose.

  14. “Cheese consumption (and invention) seems to have come first.”

    And in the case of the US, seem to have gone first.

  15. @SMFS:

    “You can make plastic from milk”

    I did not know that. Thank you.

    My afternoon is now going to be rescheduled as I read up on it, and my evening put to good use as I attempt a little home experimentation.

    I think I learn something new every day that I read this blog.

  16. Google ‘Casein plastics’. This was common in early 20thC as a counterpart to Bakelite. Whether casein-based plastics can cut it versus the vast variety of other ones we now have depends on production costs & properties. The fact that casein plastics are now rare should tell you something.

    I guess dairy farming in the UK may well go the way of coal mining, though I hope that the quality control on imported milk is good enough.

  17. I guess dairy farming in the UK may well go the way of coal mining, though I hope that the quality control on imported milk is good enough.

    I doubt it, because milk doesn’t travel well: it needs refrigeration, and is bulky, and unless they’re bringing it in on the Channel Tunnel it’ll have to be brought in by ship, which isn’t very practical.

    What I suspect will happen is a handful of farms will produce all of the UK’s demand. I couple of years back I found myself on the periphery of a milking cow convention in north Holland and discovered the technology in use nowadays is incredible: automatic milking machines, enormous milk yields driven by clever breeding and diet, etc. which the Dutch are world leaders in and flogging everywhere from Australia to Argentina. This is enabling more and more people to be supplied with milk from a handful of farmers.

  18. I don’t think UK farmers need to be too worried about exports as the EU quota system (last time I checked) limited UKproduction to significantly lessthan UK consumption of ilk and milk products, thereby ensuring that we should import some of France’s surplus production.
    This is (i) a minor but persistent contributor to our balance-of-payments deficit (ii) wasteful since milk which is about 90% water (less in whole milk, more in skimmed) has to be transported scores or hundreds of miles more than otherewise necessary (iii) damaging our rural economy since grazing only 80% of the optimum number of cattle per acre reduces gross income by 20% but net income by 40-50% (iv) one of many resasons why I am in favour of David Cameron’s attempts to reform the EU

  19. Bloke in North Dorset

    “What I suspect will happen is a handful of farms will produce all of the UK’s demand. I couple of years back I found myself on the periphery of a milking cow convention in north Holland and discovered the technology in use nowadays is incredible: automatic milking machines, enormous milk yields driven by clever breeding and diet, etc. which the Dutch are world leaders in and flogging everywhere from Australia to Argentina. This is enabling more and more people to be supplied with milk from a handful of farmers.”

    Bit of a brouhaha round here recently as a farm has been sold and apparently it’s going to be turned in to one of those automatic dairies. Bring it on , say I.

  20. Progress in increasing yield per animal, production per person, turnover per farm etc. Less need for so many farms, so many people in that farming etc. And most of us do not care enough about the cows to worry about what happens to them.

    Truly the world has become an amazing place. And cost per unit of milk has presumably gone down over the years compared to a hundred years ago?

  21. bloke (not) in spain

    Comes as news to me you can buy milk in the UK. Used as I am to seeing lait entier & leche entera with 6% fat on the carton. “Whole” less than 4% fat is the piss that’s being taken.

  22. the EU quota system (last time I checked) limited UK production to significantly less than UK consumption of ilk and milk products, thereby ensuring that we should import some of France’s surplus production.

    The last time I checked, UK milk production was substantially less than its quota, and the UK was a net exporter of liquid milk (though volume is small in either direction).

  23. So Much for Subtlety

    GlenDorran – “I did not know that. Thank you.”

    It is nothing.

    “My afternoon is now going to be rescheduled as I read up on it, and my evening put to good use as I attempt a little home experimentation.”

    Well if you really want to win the EU equivalent of the Nobel prize for Enabling Farm Corruption, you need to experiment with more than milk. I suggest trying to add olive oil. If you can make a biodegradable plastic with milk and olive oil, EU apparatchiks will beat a path to your door.

    And it shouldn’t be too hard actually.

    Tractor Gent – “Whether casein-based plastics can cut it versus the vast variety of other ones we now have depends on production costs & properties. The fact that casein plastics are now rare should tell you something.”

    This is a good Wiki-link as well:

    http://en.wikipedia.org/wiki/Galalith

    Galalith (Erinoid in the United Kingdom) is a synthetic plastic material manufactured by the interaction of casein and formaldehyde. Given a commercial name derived from the Greek words gala (milk) and lithos (stone), it is odourless, insoluble in water, biodegradable, antiallergenic, antistatic and virtually nonflammable.

    The post-War period saw incredibly cheap petroleum products and now we have massive investment in those types of plastics. The fact that moulding casein-based plastics is not possible means that a major inconvenience, but also a lot of processes would have to be re-thought.

    However as petroleum becomes more expensive, and the people we give our money to increasingly irrational, it does not harm to think of alternatives. Getting rid of non-bio-degradable plastics ought to be a no-brainer as far as government policy goes. Replacing them with something more environmentally sensitive would be an excellent policy. As long as it did not cost too much, the Tories should think about an actual sensible environment policy.

    “I guess dairy farming in the UK may well go the way of coal mining, though I hope that the quality control on imported milk is good enough.”

    Milk does not travel as well as coal. We are getting our milk from further and further away, but there is a limit. We won’t be buying New Zealand milk in large amounts any time soon.

  24. So Much for Subtlety

    bloke (not) in spain – “Comes as news to me you can buy milk in the UK. Used as I am to seeing lait entier & leche entera with 6% fat on the carton. “Whole” less than 4% fat is the piss that’s being taken.”

    I used to drink a lot of milk that was fresh from the cow. Still warm as it happens. I am not sure of the fat content, but I would be surprised if it was as low as 6%. I don’t know if it is possible anywhere near London, but in parts of the UK I would guess a quiet conversation with a small farmer, a fiver changing hands, and you could have as much real milk as you could possibly drink.

    In fact if you told them it was for making plastic and not human consumption, you could openly advertise for it.

  25. @ PaulB
    My local Tesco has more foreign butter than English, more foreign yoghourt than English, more varieties of foreign than English cheese (although I cannot be certain it sells more by weight due to the vast demand for Cheddar and Wensleydale, it seems long odds-on that it receives more cash for selling foreign cheese). France exports freeze-dried milk to the UK.

  26. @john77:

    Yes, but does it compete with the price, choice and service offered by your local corner shop?

  27. Surreptitious Evil

    I hate to point out the obvious but you don’t need to Google “casein-based plastics.”

    dearieme already mentioned Yank “cheese”.

  28. My local Tesco has more foreign butter than English, more foreign yoghourt than English, more varieties of foreign than English cheese…
    No doubt, but that’s got nothing to do with quotas. We import cheap cheese and butter from countries where it’s cheaper to produce than in England (not France), and premium cheese and butter from places which produce products we like.

  29. So Much for Subtlety

    Surreptitious Evil – “I hate to point out the obvious but you don’t need to Google “casein-based plastics.” dearieme already mentioned Yank “cheese”.”

    In fairness all cheeses could be thought of as plastics. Although it looks like most people define plastic to exclude cheese. Maybe on purpose. The amazing thing about those American slices is how they manage to make them stay soft and bendy. Palm oil I would guess. Anyone know?

  30. @ GlenDorran
    The nearest corner shop is nearly twice as far away.
    When I was a kid the nearest corner shop was about 100 yards away but we used the second-nearest which was about 200 yards away because it was better.

  31. So Much for Subtlety

    PaulB – “and premium cheese and butter from places which produce products we like.”

    It still has nothing to do with quotas, but by and large I don’t think that it is that people like the premium products. They like the premium labels. Food has become one of those luxury goods where people buy by the brand, not the actual product. So the great overwashed Guardian-reading class will pay more for ordinary French cheese because it is French. There is a strong Upper Middle Class prejudice that anything British just is awful and everything Latin is excellent.

    It is hard to convince some people that the British make anything other than Cheddar. Even though one of the features of the past generation has been the revival of regional British cheeses like Wensleydale. Presumably they want to compete with the French for the Waitrose market. Still it means that quotas are irrelevant as the more expensive French cheese is, the more popular it is likely to be.

  32. So Much for Subtlety

    To follow on from the previous comment a little, why are farmers complaining about this instead of doing something productive? Waitrose is full of people who will pay more for cheese than for Fairtrade Bolivian crack. Why not make some cheese? Presumably there are too many regulations. But it looks to me like all you have to do is throw in some herbs and spices, let it decay for a while, and suddenly your next-to-worthless milk goes for prices street dealers can only dream of.

    I suggest a simple product – take some milk, add some ham and pineapple, make some cheddar, cut into slices, pack in plastic, sell to sad single males who want an instant pizza but only have sliced white bread. Which is, at least, more honest and useful than adding some oregano, calling it Artisanal peasant-style Tuscan cheese.

  33. There is a strong Upper Middle Class prejudice that anything British just is awful and everything Latin is excellent.

    Are you familiar with Roger Scruton’s term, “oikophobia”?

  34. SMFS,
    “To follow on from the previous comment a little, why are farmers complaining about this instead of doing something productive?”

    I’m going to assume on the grounds that complaining is the most productive approach?

  35. In my experience, English farmers are only truly happy when they’re grumbling about something, although they don’t seem to be so voluble these days.

    They particularly hate the weather of course, which is always wrong. This seems odd because England is rather green, and our weather so exceedingly clement (as Jeeves had it).

    Don’t get them started on farm subsidies either.

  36. From what I can gather, French cheese seems to be going the same way as their wine. For example, the “Somerset” in Somerset Brie is no longer hidden, and increasing numbers now look for it.

    This sort of thing won’t please the Polly tendency; it was decided that French cheese was best some time ago, and things must stay the same for ever. Like coal mining communities, corner groceries and footballers catching the same bus as the fans.

  37. SMFS:

    However as petroleum becomes more expensive, and the people we give our money to increasingly irrational, it does not harm to think of alternatives. Getting rid of non-bio-degradable plastics ought to be a no-brainer as far as government policy goes. Replacing them with something more environmentally sensitive would be an excellent policy. As long as it did not cost too much, the Tories should think about an actual sensible environment policy.

    This sounds way too much like a government picking winners in the same vein as their deciding windmills and electric cars (2010 generation) are the way forward.

    If environmentally friendly plastics can be made from milk, plastic companies would be all over it like a rash and would make billions in the process. That they’re not suggests that it is not as feasible as you are suggesting, and I don’t believe a lack of “nudge” from the government is what is preventing their development.

  38. @ PaulB
    I accept your point about French cheese, but why import yoghourt or dried milk? As to cheaper butter – yes, that *does* have something to do with quotas because the shortage of supply of English butter relative to demand pushes up the price (ask Tim if you don’t believe me!)

  39. john77: milk quotas have got nothing to do with the price of English butter. UK milk production has been under quota for the last ten years, and a long way under quota for the last seven years.

  40. So Much for Subtlety

    Tim Newman – “This sounds way too much like a government picking winners in the same vein as their deciding windmills and electric cars (2010 generation) are the way forward.”

    It is picking winners, but it is not like picking wind power. Plastics are not a good thing. Generally speaking. At least not once we have used them. They do create problems and externalities. All other things being equal, we would prefer biodegradable plastics. I think I can say that no one here would argue with that. With wind power, things will never be equal. They cannot be equal. So there is no point doing them. But a different sort of plastic is a reality.

    “If environmentally friendly plastics can be made from milk, plastic companies would be all over it like a rash and would make billions in the process. That they’re not suggests that it is not as feasible as you are suggesting, and I don’t believe a lack of “nudge” from the government is what is preventing their development.”

    I have pointed out any number of reasons why they would not be. I have pointed out that petroleum used to be cheap and milk used to be expensive. I pointed out that milk has become cheap and one day fossil fuels may be too expensive. I have said that there is a legacy cost in the machinery designed to use petroleum-based products that means they would be reluctant to switch. You cannot say that I have no explored many of the reasons why they would be slow to switch.

    I have also said that it *may* be a matter of price. That the government could think about shifting that price balance towards non-petroleum products. I don’t see what is in any way unreasonable about that. The Co-op does use bdg plastics. They work fine and are not noticeably more expensive – although they are not, of course, made of milk. This, in the sense of bdg plastics, whether they are made of milk or not, is not like wind power that will never be cost effective. This really does look like moving the cost curve a little.

  41. So Much for Subtlety

    Ian B – “Are you familiar with Roger Scruton’s term, “oikophobia”?”

    Familiar with it? I live it. Oikophobia indeed. There ought to be an equivalent where the “oiks” have a reasonable and rational dislike of the Upper Middle Class. Proof of this, and good news for farmers, is that it turns out, again, that all the health advice they have been giving us is wrong:

    http://www.dailymail.co.uk/health/article-3024374/The-secret-staving-diabetes-Eat-four-eggs-week-plenty-cheese-yogurt.html

    David in NZ – “I’m going to assume on the grounds that complaining is the most productive approach?”

    A country is f**ked six ways to Sunday when even the farmers think that the most productive use of their time is lobbying as a special interest.

  42. @ PaulB
    Quoting your own reference: “Production is often affected by weather and in 2012/13 a wet summer was followed by a cold spring, which affected pasture growth and turnout, and contributed to the reduction in annual milk production.” So to avoid going over-quota the dairy industry has to target being under-quota. [Incidentally it only gives nine years to 2013, not ten to 2014, but that is trivial]. It shows production being over quota for the first three years of “New Labour” and again in 2003/4.
    Using your own reference again the UK deficit with the EU on dairy net imports has been continuous for, at least, 25 years in a row and the recent average is over £1.2 billion per annum. Any fan of Gordon Brown may regard that as petty cash but “a billion here,a billion there and pretty soon you’re talking about real money”.
    You wonder why I support the Conservatives despite the media portrayal of them as the “nasty party” – well it is because in reality their policies help the poor and New Labour has been the only government in my lifetime to make the poor poorer (aggravated by Ed Miliband’s subsidy to well-off householders installing solar panels and landowners licensing unreliable windmills).
    http://www.dairyco.org.uk/market-information/processing-trade/imports-exports/uk-dairy-trade-balance/#.VR8m-5P262k

  43. @ SMFS
    “There ought to be an equivalent where the “oiks” have a reasonable and rational dislike of the Upper Middle Class.” Any such equivalent would be invisible because it would be hidden within the vast unreasonable and irrational dislike of the Uper Middle Class purveyed by the Grauniad, Mirror and Independent.

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