BRITISH FARMERS MOVE TO LIMIT MILK PRODUCTION

Press, Volume CII, Issue 30286, 12 November 1963, Page 7

BRITISH FARMERS MOVE TO LIMIT MILK PRODUCTION

The National Fanners’ Union of Great Britain is apparently considering means of limiting liquid milk production with the idea, presumably, of maintaining prices to producers. A copy of an article in the London "Economist” has been sent by the director of the Economic Service of the Meat and Woo! Boards. Mr R. H. Bevin, to the chairman and members of the Economic Service Committee and the Meat and Wool Boards to illustrate thinking on agricultural protection and subsidies. "Observe the British rural scene—and first the dairyfarms, whose single vast direct customer, the Milk Marketing Board, is at pres-, ent engaged in a brisk little j verbal battle with the Nat-1 ional Farmers’ Union,” says! the “Economist.” “The board buys, with some trifling exceptions, all British milk from the farm and then sells it in two separate markets. The first is for liquid milk, which is (so far, but for how long?) immune from foreign competition. In this market the board is allowed by the Government to charge a price

that is supposed to cover the losses incurred in the other market —for milk for manufacturing into butter, cheese and so on—where foreign competition, from New Zealanders, Dutchmen, Danes and so on. is intense. The two separate prices are then averaged out. and the producers are paid out of the j resulting pool of cash. ! "In the past five years Brit- ! ish milk production rose by 1307 million gallons (the re- ‘ cent rate is around 3 per cent 1 a year); the liquid market, although growing, can onlytake a certain amount: so I more milk is sold cheaply I for manufacturing: so the pool price has been dropping. Between 1958 and 1963 the number of milk producers in England and Wales fell by 21.500. or 16 per cent; the average profit per milk farm in that period fell by 10 per cent. | "The National Farmers’ Union now proposes a clever 1 system whereby milk far-1 mers would actually get a | bonus for not producing more than an individually allotted quantity; the marketing board, which does not want a change at present, rightly points out that such a scheme I would penalise those who | marginally—even acciden.

tally—exceed their allocation, while those who set out to produce over their quota for a smaller profit margin would still be able to push down the pool price (these, incidentally, are just the lowcost farmers whom one would like to encourage: but milk prices are set to counteract regional and even soil advantages, and nobody in the industry would dare to suggest that the plain economics of production should be allowed to rule output and rewards'). "The absurdity is that the N.F.U., in an alternative proposal that it gingerly rejects, has in fact simultaneously made the bright suggestion that each milk producer should be given a quota, but allowed to sell the right that it carries to dispose of milk. This would limit production of expensively produced and distributed English milk to its present level and. if allied to a low price, would cause the most efficient producers who could meet this price economically to buy up the quotas of inefficient producers who could not. After a while the uneconomic producers would be out of business, receiving in exchange a sum for their quotas that would help them to set up in some other line.”