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Too Much Of A Good Thing

Posted by Viktoria Michaelis on May 12, 2016 in News & Opinion |

It is hard to come to terms with those who enter into the business world and almost demand that it gives them a living. It is harder to come to terms with those who have little or no understanding of the way the consumer world – from the wholesaler right down to the customer – works, with supply and demand.

Farmers, it is fair to say, work exceptionally hard and we would be in a bad state without them. Even so, there are times when I wonder whether they are living in the same world as I am. Not so long ago, dairy farmers greeted the dropping of quotas, where each farm could only produce and sell a certain quantity of milk. Now they are complaining about the price being offered and paid for their milk. The price they are receiving is less than the actual cost of production. Any price rises in the shops does not benefit them at all, it goes straight into the pockets of store owners and wholesalers. So, to cover the lower prices being paid them, it seems as if some dairy farmers are taking advantage of the lack of quotas, and producing more milk.

Milk

Photo Source: Mike MozartCreative Commons

There is a demand for milk and milk products, of that there can be no doubt. The problems lie with some of the so-called Discount Stores who, buying tens of thousands of liters of milk every day, have a good deal of power to negotiate better prices for themselves. Their argument is that they need to retain market position against stiff competition, and customers do not wish to pay higher prices.

The fact is, customers would pay the higher price if there was no choice, and have done so in the past. There is simply so much milk available that the milk producers have placed themselves in a losing position: they are also faced with stiff competition from other dairy farmers keen to bring their produce onto the market, and with no other choice but to sell at a lower price or lose their production completely.

Rather than complain, farmers should look at reducing production, so that supply comes closer to demand, and thus force the price back up to ensure a profit margin. The main word here is Should, because, to date, none of them have suggested cutting back on production. Rather, they are insisting that the government step in a subsidise their production with taxpayers money.

Sometimes people should look to their own actions before demanding change – or support – from others.

  • Viktoria Michaelis.

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