Isn’t it time we started paying our farmers a fair price for their produce?

Fair trade is big business in the UK.  The Fairtrade Foundation’s website states that the  most recent valuation of the fair trade market was £493 million for 2007.  Given that it has been doubling in value every two years, it is likely to be worth a lot more now.

This is testament to the commitment and vision of the organisations, which include Christian Aid and CAFOD, who launched the labelling scheme back in the early 1990s.  Fair trade’s success demonstrates the desire of many consumers to purchase products that have been produced in an ethical way.  As demand has increased, food companies have increasingly switched to fair trade ingredients.  Last month Maltesers became the latest chocolate product to gain Fairtrade certification.

If you look on the Fairtrade Foundation’s website for a definition of Fairtrade and the  Fairtrade minimum price you’ll find these descriptions:

‘Fairtrade is about better prices, decent working conditions, local sustainability, and fair terms of trade for farmers and workers in the developing world. By requiring companies to pay sustainable prices (which must never fall lower than the market price), Fairtrade addresses the injustices of conventional trade, which traditionally discriminates against the poorest, weakest producers. It enables them to improve their position and have more control over their lives.

‘The Fairtrade minimum price defines the lowest possible price that a buyer of Fairtrade products must pay the producer. The minimum price is set based on a consultative process with Fairtrade producers and traders and guarantees that producers receive a price which covers the cost of sustainable production. When the market price is higher than the Fairtrade minimum price, the market price is payable.’

Bear these in mind when you hear that today farmers from round the UK have descended on Parliament to join a summit meeting about falling milk prices.  This protest has been called by the National Farmers Union (NFU) in response to a drop of nearly 4p a litre in the price dairy farmers will get from three processing firms that supply milk to Asda, Morrisons and the Co-op.

NFU vice-president Adam Quinney has said that, “The latest round of cuts to milk prices by three major dairy processors will mean dairy farmers are making a significant loss for every litre of milk they produce.”

Farmers who do not supply Tesco, Sainsbury’s, Marks & Spencer or Waitrose, which pay dairy farmers directly – will lose £350 to £400 per cow per year according to Mr Quinney.  He warned that  this could lead to a mass exodus from the industry.  The NFU is calling for farmers to be paid at least the production cost of milk and for more equitable contracts to be introduced that stop dairy farmers being exploited.

This doesn’t exactly sound like fair trade to me.  There has quite rightly been a big push over the last two decades to see farmers in poorer countries being paid a living wage for the work that they do.  Surely we should expect the same for our own farmers?  Both Jesus and Paul talk about workers deserving their wages.  Christians and churches have put plenty of energy into turning fair trade into a success.  Couldn’t some of these energies be applied to producers in our own country?  Exploitation is still expliotation no matter which country it is happening in, whether rich or not.

The Fairtrade Foundation has this to say about UK farmers:

The Fairtrade Foundation recognises that many farmers in the UK face similar issues to farmers elsewhere, not least ensuring that they get a decent return for upholding decent social and environmental standards in their production. We therefore support the promotion of sustainable production for UK farmers.  We do recognise that many farmers in the UK face similar issues as farmers elsewhere, not least ensuring that they get a decent return for upholding social and environmental standards in their production. We agree that the principles behind fair trade may provide useful insight into the debate on improving the situation for UK producers.

Agriculture Minister Jim Paice has  said that of the 49p which is the average price of a pint, 16p goes to farmers and the price cuts will be, “a massive burden for the vast majority of dairy farmers.  The price in the shops isn’t really high enough to compensate for all the costs in the food chain.  The reality is that if milk producers do go out of production… then we’ll end up with a price hike… because liquid milk isn’t readily imported and if there’s a shortage it will go up.”

Our national buying habits have revealed that many of us are happy to pay extra for fair trade and organic food along with ethically reared meat.  Isn’t it time the producers, supermarkets and government worked together to ensure that farmers are not having to sell food below cost price just for the sake of driving the supermarket price down by a few pence?  Surely it makes sense?

Categories: Fair trade, Government

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10 replies

  1. A fair price is what the market will sustain. Attempts to manipulate that will backfire. Presumably the big milk purchasers can buy milk at those low prices because there are people able to supply it and make a profit from that. If other suppliers cannot make a profit, they need to reduce their costs or get out of the business.

    The only way to change those hard economic facts is to shift to a full-blown Soviet style socialist command economy. Is that what Britain’s farmers really want? After all, they are not “the poorest, weakest producers”, but a massive and well organised lobby of mostly wealthy Conservative supporters.

    • It’s not quite as black and white as free market vs Soviet system, but the point is that the market doesn’t appear to be functioning particularly effectively.

      Why do the buyers, the big supermarkets, have so much power over these individual farmers such that they can drive down the price, and the farmers can’t do anything about it?

      It isn’t like there isn’t a union (NFU) to act on behalf of these individual farmers.

      My sense is that this is a lot like the banking sector where competition policy over the years has encouraged the development of 3/4 big players in a sector – big enough players that they can claim to be too big to fail when they indeed fail.

      Increasing the level of competition amongst buyers of milk from farms would be a better solution. With more buyers, tacit collusion is harder, and likely the price farmers get will head back up to something sustainable. Some kind of Fair Trade mission I don’t think is warranted here.

      • Peter and James thanks for your comments. I agree that we don’t want a Soviet style system and the Common Agricultural Policy shows the failings of trying to prop up inefficient farming practices.

        The problem as I see it is that if farmers are squeezed too much and even the average sized farms cannot produce the milk sustainably then if they close down, will the large farms be able to increase their production to compensate? If the answer is yes then fair enough, but if they can’t then no one benefits.

        The Prime Minister and the Agriculture Minister both think the system needs changing. The Fairtrade Foundation don’t think a UK Fairtrade label is the answer, but the supermarkets and processors in the middle hold a lot of power over farmers. Someone should be checking that those at the top are not abusing that power.

  2. In the meantime there is an ongoing responsibility to assess where we buy our produce from. Speaking for ourselves we do still use supermarkets but have also been signed up to a vegbox and independent milk supplier for some years (Riverford) for which we pay something like 56p per pint. It is more than Tescos but we think a more sustainable way of doing farming and a fairer way of doing business.

    • A lot of farmers I’ve met are very are good at finding ways to generate income from their resources. Veg box schemes and farm shops are a good example. Often they have to do it to survive. We also have the luxury of being able to buy some of our food direct from farms through Riverford too. I know not everyone can afford to do this, but for those who can it makes sense.

  3. Who gets the money from a pint of milk and in what proportion. Are the supermarkets and processors fair to farmers. If across the board it costs more to keep the cow than the income it generates then farmer,s will diversify into something else which is profitable. Then will we have enough milk supply. (black coffees ok but i’m not so sure about dry all bran ) Its probably expensive to set up again in dairy farming even if the market were to become more favourable. Many farmers have already left the dairy business in recent years, how many can we afford to lose ?.

  4. Peter’s right, the farmers are a lobby milking the consumer to try and get artificially high prices for themselves. The price signals are saying we have too much milk and hence we want less. The best thing unprofitable farmers can do is shut down and enter a different market, allowing supply to decrease and other more efficient farmers to be profitable. It’s not unfair that some farmers and businesses make losses, it’s the natural operation of the market mechanism. It’s not even like farmers operate in an especially risky industry. Sure, weather affects crops sometimes but they produce a necessity, food, hence they will pretty much always have decent demand.

    • I’m willing to admit I may be wrong on this one, but The Archbishop of York, Dr John Sentamu, Jamie Oliver and Hugh Fearnley-Whittingstall are in agreement with me. Morrisons and Co-op have increased the amount they pay farmers for their milk and Robert Wiseman who are Britain’s biggest dairy firm have cancelled their milk price cut and the government has also got involved over this. I’m thinking this can’t just be inefficient farmers holding everyone to ransom. There must be more to it all than that.