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Dairy farmers sell direct to public in order to boost margins


14 Aug 2015

BY Olivia Midgley


Online retailer Farmdrop has seen a 700 per cent increase in farmers registering to sell their milk direct


More people are buying milk direct from local farmers

The dairy crisis has prompted more farmers to sell their milk directly to consumers in a bid to boost profit.


Online retailer Farmdrop has seen a 700 per cent increase in farmers registering to sell their milk direct.


The online marketplace, which lets people buy fresh food from local producers, passes dairy farmers 80 per cent of the retail cost of milk compared to an average 50 per cent they currently receive from supermarkets.


It has seen a 422 per cent increase in people buying milk direct from local farmers.


Farmdrop founder Ben Pugh said: “The ongoing milk crisis has shown just how broken the current food supply chain is for both producers and consumers. There’s been huge technological innovation in industries like entertainment, travel and finance and it is now time for the internet to help completely re-engineer the food industry.


“We know that 70 per cent of people want to buy local and support local producers, and we’ve found a way to serve that need, remove unnecessary middlemen and give people better quality food and farmers a better financial deal and reduce waste.”


It came as regional retailer Booths reported sales of its Fair Milk saw a five per cent growth in the last four weeks, outperforming the market which saw just 0.3 per cent growth as a whole.


Booths launched its Fair Milk scheme, which pledges to pay the highest market price to farmers, in May 2014.


A recent survey by market research organisation Mintel found 51 per cent would be prepared to pay more than £1 for four pints of milk.


This week Morrisons launched a new, more expensive brand of milk which it said would see 10ppl go back to producers.


The move has prompted a mixed reaction from the farming community, with some doubtful that producers will see any benefit.


Others said the supermarket was ’passing the buck’ to consumers, when it should be filtering money from its own margins back down to producers.


Organic dairy farmer Jan Prince urged Morrisons to ‘show real commitment’ and add 10ppl on all the retailer’s fresh milk.


Staffordshire tenant farmer Giles Bristol thought it was ‘a great idea’ but added it was now up to the public to vote with their feet.


The Bradford based chain bowed to pressure from the unions and farmers following protests in its stores last week.


Morrisons said the 10ppl would be shared out amongst all Arla farmers as the milk in the ’Milk For Farmers’ pot was not from a segregated pool but from the non-aligned pool which the majority of Arla farmers are a part of.


Farmers said that while it would depend on consumers, the 10ppl extra would be a ‘drop in the ocean’.


Kendal dairy farmer James Robinson said: “It will be diluted and if it’s shared out in Europe it will mean nothing for farmers.


“Although I think it has been done to pacify protesters, it is a step in the right direction and attention will not be now be on the other supermarkets to see if they do something similar.”


However analysts said that while supermarkets were often seen as the ‘pantomime villains’, the fall in milk prices had been driven by a range of factors including lower demand from the far east and the Russian embargo on EU dairy produce.


Neil Saunders, managing director of retail research agency Conlumino, said: “Supermarkets have been keen to pass on this lower cost because the market remains highly competitive and all of the grocery players are keen to have low prices on key staples.


“The solution here is for farmers to persuade the British public to pay a bit extra for high quality British milk.”


Janet Godsell, professor of operations and supply Chain strategy at the University of Warwick, said the sector had to be’ honest about which parts of the industry are not thriving and help them to adapt’.


She said: “There are parts of the industry that have adapted and are surviving, and this has been by taking a more holistic supply chain perspective; collaboratively though dairy development groups or through vertical integration by developing value added products and services.”

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