Tuesday, November 26, 2002

The future of the dairy industry [J. Agricultural and Food Chem. -- requires subscription]
The trend of commodity milk to ever decrease in economic value means that dairy farming has to continually become more efficient simply to survive. Economy of scale provides an obvious way of reducing costs. In developed countries, and excepting those where the small farm unit is being maintained by subsidies for cultural and other reasons, the single-family farm is becoming economically nonviable. The trend is either for a larger farm based around a family unit, with additional labor, typically milking from 200 to 500 cows, or for farms run as a milk production business based on herd sizes of 1000-5000 cows. Future trends will undoubtedly see a decrease in single-family units and migration to a larger herd format....

The consumer seems to have the power to bring about change. In reality, it is often the major retailing chains that have the real power, and they base their decisions on what they believe the consumers want. This is of some concern to the dairy industry because the supermarket chains exert enormous power over the dairy value chain, and consumer concerns can be strongly over-represented by vocal minorities. If the buyers for the retail chains do not fully understand this, there is a real chance of retail outlets distorting the true market for dairy (and other) products.

These industrial scientists have an incredible inability to imagine a logic that isn't inexorable. According to the UFW site just mentioned, 7� of every dollar you spend on apples goes to farmers, 4� to workers. 68� goes to supermarkets. If the dairy numbers are anything like that, isn't increasing concentration in an attempt to survive on ever-slimmer margins the least rational response to the problem?


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