British farmers' milk price protest

Up to 2,000 dairy farmers are expected in Westminster today to protest at cuts to the price they're paid for their milk. Last year, dairy farmers received a little under 29p for every litre they sold: this is set to fall to less than 25p. Since it costs about 30p to produce a litre of milk, the cuts constitute yet another catastrophe for a benighted domestic industry, and may put many thousands of dairy farmers out of business. "There has been an unprecedented outcry of anger and frustration among farmers," says the National Farmers' Union. "We are united in our demand for an immediate reversal" of the cuts.

Prices for farmers have stalled over the last 15 years: in 1997 they were receiving 25p for a litre of milk, while feed costs alone have doubled since 2010. Half of Britain's dairy farmers went out of business between 2000 and 2010. Like the pig farmers who only save themselves from going out of business by growing their own feed, dairy farmers will likely attempt to make up the shortfall by reducing staff, which will of course have corollary impact.

And it's not as if milk has got much cheaper for you or me. Journalists like to catch politicians out by asking them how much a pint of milk costs: even the current farming minister had no idea when the question was put to him earlier this week. The answer, as the cribbing PM knows, is "just under 50p" – specifically 46p. Only five years ago it was nearly 10p cheaper.

Many people will automatically blame supermarkets for this, and it's true that major retailers do help to depress prices through endless discounting and by ruthlessly pricing against each other. But the so-called "processors", to which many farmers sell their milk, are behind the current proposed cuts. Some farmers sell their milk to these processors – Wiseman, Unigate and so on – who then sell it on, and can often unilaterally choose to pay farmers less. Supermarkets, for once, almost come across as good guys: even the National Farmers Union says that Tesco and Sainsbury's offer "good" contracts to farmers, while M&S and Waitrose also pay the farmers directly, and those who supply to them are less likely to be affected by these cuts.

How much is a fair price for a pint of milk? The answer is: whatever price allows everyone in the supply chain – farmer, dairy, supermarket – to turn an honest profit. In 1997 the supermarkets took 2.5p profit for every litre of milk they sold: 10 years later they had more or less quadrupled this to 9.3p. Nobody wants to make Richard Broadbent any richer, or for that matter the shareholders of Müller – who own Wiseman – and lobbying processors and supermarkets aggressively is a worthy pursuit. But until not so long ago, the government itself took a role in this, guaranteeing a minimum price for milk producers. With the industry lurching from one crisis to the next, and with more and more farmers going out of business, it's time we had a debate about bringing this back.