More retail pressure

Dr. Alkathene

Member
Livestock Farmer
One lesson from the start of the lockdown is just how vulnerable the supermarket supply chain is. If everyone left the plug out of the tank for 24 hrs, the shelves would be empty. But when have farmers ever worked together?

I'd be concerned about this story if I worked for Tesco or was a shareholder, because what they are saying is "We can't run our business as well as Aldi & Lidl do, the only way we can compete is by screwing our suppliers"

As an aside, when Muller bought out Wisemans, staff were told that as the Muller business is so big, Tesco won't be able to dictate terms in future.

As has been suggested on here, Muller and Arla should be big enough, and have other markets, that they can tell Tesco this is one game they won't be playing. Tesco can hardly say, "Well, we'll buy elsewhere" can they!

And before anyone suggests it, neither the consumer or the Govt (think balance of payments) would stomach imported liquid milk.
Didn’t Muller recently get a bloody nose from bidding low on a milk contract with Tesco to win the business from Arla?
 
Much of the problem arises with those producers who treat their businesses like a hobby - And I am not talking about size.
A Dairy Farm is not a business unless it can pay a realistic rent or rental equivalent for its production facilities including land, buildings, facilities and value of livestock.
 
Much of the problem arises with those producers who treat their businesses like a hobby - And I am not talking about size.
A Dairy Farm is not a business unless it can pay a realistic rent or rental equivalent for its production facilities including land, buildings, facilities and value of livestock.
Then it comes down to i what are you regard as being a realistic rental return?
 

lloyd

Member
Location
Herefordshire
Looking in from the outside at dairy farming ,who is telling the truth?
Every six months the story changes from one of massive expansion
costing millions in infrastructure, machinery and cows to six months
later one of depressed prices and endless dispersal sales.
This has been going on cyclical for many years now so is it just
another headline grabbing story.
 

Hindsight

Member
Location
Lincolnshire
The problem is people don't pay a fair price for their food. Governments use the supermarkets to keep food prices down therefore the consumers have spare cash to spend on other things thus keeping the economy rolling. With Corona all bets are off there is liable to be widespread unemployment so people are going to be short of money so there is going to be downward pressure on prices and as Tax revenues decline Governments are less likely to be interested in supporting agriculture. Things are not looking good.


I consider the issue a little more complex though fundamentally not good for commodity producing farmers and growers.

Tesco and the established four major supermarkets are in a difficult position. Aldi/Lidl arrived on the scene around early 2000' with a business model totally different to the major four. Discounters. It was very much few lines, so one sort of cauliflower not ten. Simple presentation - ie on a pallet. And minimal staffing costs. And after initially struggling the 2008 recession was a godsend.

Now 10 years on my wife shops regularly at Lidl and Aldi with her friends. She comments on the 'good value' but it is not price that gets her to go - she actually enjoys shopping there. That or me says it all. If in 2007 I had said we ough to shop at Lidl the look across the kitchen table would have been enough to curdle milk. Sainsburys or Waitrose. The major four have lost there footfall and the ability to charge enough to cover there higher cost base.

And we are seeing the upshot of that now as they fight the discounters on price from a position of too high cost base. So all suppliers of everything will be screwed as TESCO senior management try to extract sales growth.

Hey ho. As I am just about to toodle off to Morrisons to do the weekly shop.

Best wishes,
 

Lowland1

Member
Mixed Farmer
I consider the issue a little more complex though fundamentally not good for commodity producing farmers and growers.

Tesco and the established four major supermarkets are in a difficult position. Aldi/Lidl arrived on the scene around early 2000' with a business model totally different to the major four. Discounters. It was very much few lines, so one sort of cauliflower not ten. Simple presentation - ie on a pallet. And minimal staffing costs. And after initially struggling the 2008 recession was a godsend.

Now 10 years on my wife shops regularly at Lidl and Aldi with her friends. She comments on the 'good value' but it is not price that gets her to go - she actually enjoys shopping there. That or me says it all. If in 2007 I had said we ough to shop at Lidl the look across the kitchen table would have been enough to curdle milk. Sainsburys or Waitrose. The major four have lost there footfall and the ability to charge enough to cover there higher cost base.

And we are seeing the upshot of that now as they fight the discounters on price from a position of too high cost base. So all suppliers of everything will be screwed as TESCO senior management try to extract sales growth.

Hey ho. As I am just about to toodle off to Morrisons to do the weekly shop.

Best wishes,
I'd written a long reply but really it was just a rambling agreement. My daughter has been in London this week flat hunting before university starts in September and she sent pictures of the flat etc but the clincher was 'It's just round the corner from a Lidl.'
 

som farmer

Member
Livestock Farmer
Location
somerset
s/mkts are highly successful businesses, run by accountants, that are right on top of expenses etc,
farmers, have a reputation for 'complaining'.
s/mkts drop price, farmers moan, however justified, the problem is, the milk keeps coming, so, the price drop, has not made any difference, so why not drop it again, and it still keeps arriving ! The obvious truth, is, if they could produce it cheaper, they would, but, why should they ? Plenty of idiots (me included) work their socks of, so they can use it, as a come and buy me, item!
 

stablegirl

Member
Location
North
I listened to the kite podcast today, actually the last 4 of them, never done so before and they were pretty interesting.

The most recent features a American dairy analyst, describing how the US government has thrown massive support into dairy, re paying producers for any dumped milk during the pandemic, and then paying for any price cuts during the supply chain issues at the start.

The government then initiated dairy food boxes for the homeless and people out of work.

In short cheese price its the benchmark for milk price in the states, before dividing, it was $1.87/lb which was good, then for a couple of weeks it got to $1.00/lb then now its gone mad upto $2.80/lb.

On top of this beef hasn't gone up so they haven't culled any cattle and the grain, corn, markets are low. All pointing to the US producing a vast amount of milk this autumn.
 
I listened to the kite podcast today, actually the last 4 of them, never done so before and they were pretty interesting.

The most recent features a American dairy analyst, describing how the US government has thrown massive support into dairy, re paying producers for any dumped milk during the pandemic, and then paying for any price cuts during the supply chain issues at the start.

The government then initiated dairy food boxes for the homeless and people out of work.

In short cheese price its the benchmark for milk price in the states, before dividing, it was $1.87/lb which was good, then for a couple of weeks it got to $1.00/lb then now its gone mad upto $2.80/lb.

On top of this beef hasn't gone up so they haven't culled any cattle and the grain, corn, markets are low. All pointing to the US producing a vast amount of milk this autumn.
That’s what happens when governments interfere.
 

SFI - What % were you taking out of production?

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  • 100% I’ve had enough of farming!

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Red Tractor drops launch of green farming scheme amid anger from farmers

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As reported in Independent


quote: “Red Tractor has confirmed it is dropping plans to launch its green farming assurance standard in April“

read the TFF thread here: https://thefarmingforum.co.uk/index.php?threads/gfc-was-to-go-ahead-now-not-going-ahead.405234/
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