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Original poster

Will the Farmer's Brand milk sell?

24 replies

MaximiseProductivity · 11/08/2015 22:06

www.bbc.co.uk/news/uk-33857629

Morrisons are to create a new milk brand which guarantees 10p per litre to farmers and would see a four pint carton of milk 23p more expensive.

There are things that need to be sorted out about how it will be paid and how farmers will benefit but for the time being, lets assume it will reach the right people correctly.

In theory, most people seem to support the farmers' need/right to be paid a fair price, but in the real world, given the choice, will people actually buy the milk that is 23p dearer?

OP posts:

MrsRhettButler · 11/08/2015 22:08

I definitely will

squidzin · 12/08/2015 21:47

For Christs sake if corporates want to sell a loss-leader they should absorb the loss themselves not pass it onto their supplier or charge the customer more.

If Morrisons are so concerned about the plight of the dairy farmers, PAY them a fair price, make your loss on that one product to lure customers into your shop to buy you other overpriced goods.

All supermarkets use milk as a loss leader. They need to take responsibility not us.

IKnowIAmButWhatAreYou · 14/08/2015 08:41

I disagree.

If people want milk they should be prepared to pay a fair price for it, one that benefits everyone in the supply chain, rather than an artificially low price that disadvantages suppliers.

If you don't like that, source your own...

WeAllHaveWings · 14/08/2015 08:47

I think Morrison's is just trying to play a publicity card while protecting their own profits. Why can't they just pay more than the cost of production?

But the National Farmers' Union (NFU) said that only Marks & Spencer, Waitrose, Sainsbury's, Tesco and the Co-op have arrangements where farmers are paid a price above the cost of production for milk.

Sallyhasleftthebuilding · 14/08/2015 08:50

What is the current cost the milk? We pay £1.40 for two pints, no choice in that. Dairy farm is up the road so no delivery as such.

WeAllHaveWings · 14/08/2015 08:54

Tesco is £1 for a 4 pint carton (I think).

Hardtoknow · 14/08/2015 09:03

I'm baffled why milk is as cheap as it is. To me, it is an essential. I have it on cereal, in tea & coffee, the children drink it at bedtime. I can't substitute it with anything else. It isn't like bread where I will buy whichever brand is on offer that week or fruit where I will get pears instead of apples if one is cheaper than the other that week.
I buy milk regularly so pick it up where ever I am when I need it - the supermarket, the corner shop &, if desperate, WHSmith at the motorway services near us. I say desperate as I object to paying the motorway services premium. But I don't go to ASDA as I know that that is one of the cheapest places to buy four pints of milk. I go there as it is my closest big supermarket. When they reduced the price from £1 to 89p, my thought wasn't "great, I'll save 22p or so a week" but "I bet that is the farmers missing out even more".
I'm not going to pay the premium for organic as I don't think the farmers get any more anyway.

PacificDogwood · 14/08/2015 09:05

Oh my, yes, I so would by that milk!
But don't shop at Morrison's - there's none nearby.

Will other supermarkets follow, I wonder? Yes, I am staring at you, MrTesco!

We go through loads of milk and I am embarrassed how little it costs tbh.

WeAllHaveWings · 14/08/2015 09:08

Pacific , Tesco already pay over the cost of production. morrisons don't and are passing that cost onto their customers. Tescos are looking better (for once)

Lagoonablue · 14/08/2015 09:10

I would. Then we have a milkman which is an expensive way to get milk too but keeps someone in a job.

PacificDogwood · 14/08/2015 09:10

Ah, interesting, thanks.
Makes me feel better, I suppose

Methe · 14/08/2015 09:11

I'd buy it but I don't like morrisons so won't get the opportunity. If other retailers take it on I would. I've always said I'd pay more for milk .

Original poster

MaximiseProductivity · 14/08/2015 09:13

I thought Organic Milk did get a better deal for the farmers?

OP posts:

poocatcherchampion · 14/08/2015 09:15

Its a stunt. It should be a normal price for all milk.

People will buy it once or twice then go back to their regular choice. Consensus will then be that people don't really care.

PacificDogwood · 14/08/2015 09:18

Of course it's a stunt - get bodies through the front door with good publicity and they'll buy more than just milk. Milk has always been a loss leader.

MoreBeta · 14/08/2015 09:21

In microeconomic terms this 'Farmers Brand' milk is what is called price discrimination.

Rather than just have one price for milk the optimal pricing strategy is to have multiple prices for milk each type having a different feature and different price so that the supermarket maximises revenue and profit by picking up customers who are willing to pay more than the price of standard milk.

Organic food is another example of supermarkets using price discrimination. Some customers are willing to pay more for food with perceived quality or ethical features and some are not. Therefore supermarkets offer lowest cost 'Basics' range food, higher priced non organic but higher welfare 'Red Tractor' food, Fair Trade food offering fair but higher prices to farmers, and also organic 'Soil Association Certified' food which is priced higher.

This Farmers Brand milk is just another way to maximise revenue form customers who express a preference for 'fairly priced milk'. Not many customers will care but some do and hence the supermarket makes more money by catering for the preference of both price sensitive who want low prices as well as less price sensitive customers who are willing to pay more.

MoreBeta · 14/08/2015 09:26

Organic milk is more expensive to produce and the farmer may not make any more profit from producing organic milk. Indeed I have noticed some organic vegetables are same price as normal vegetables when there is a supply glut. Same with any food commodity.

Buying organic food is not a guarantee of fair prices for farmers.

DopeyDawg · 14/08/2015 09:26

MoreBeta - that's useful, thanks.

I think that supermarkets should absorb the costs of a 'loss leader' item, not the producer. THEY make plenty of profit.
There may be customers who would LIKE to buy higher priced goods which are more ethical in passing profits to producers (milk, coffee, tea, bananas) but cant afford to do so?

TheGirlOnTheLanding · 14/08/2015 09:30

I agree the upper markets should absorb the loss of a loss leader, and that it's a cynical stunt. I'm currently trying to find a dairy that delivers in our area instead - if this was more likely available I think many people who've been been made aware by the farmers' protests would go for this option, even if it's slightly more expensive, as at least you know the increased price is going to a local supplier, not just into corporate coffers.

MoreBeta · 14/08/2015 09:34

I come from a farming background and then after university went to work as a commodity trader.

The concept of a 'ethical fair price' in the commodity trading world where there are many buyers and sellers does not actually exist. There is a market price for a given quality type of commodity and that is it.

The issue here is whether supermarkets hold such a dominant position that means they can dictate 'unfair' prices to farmers. There have been several regulatory inquiries and non have really proved consistently unfair purchasing practices.

In the end there is a market price for milk, some milk is imported from Europe and ultimately the supermarkets will pay the price they need to pay to get sufficient supplies. What price they then sell it to their retail customers whether that is full price or as a loss leader really has nothing to do with the price they pay farmers.

Sallyhasleftthebuilding · 14/08/2015 09:37

Wow it's cheap then. Farmers need to get together and insist on higher prices. It's difficult being a one man band farmer, maybe they should be more like Tesco and band together? But agree if a shop sells it cheap they should still pay a fair price in the first place. I buy 4 pints a day at £2.40 a pop, kids milk at school is 24p a day.

Oldraver · 14/08/2015 14:06

Milk is currently around £1 for four pints where I am...sometime even as little as 89p...its a bloody ridiculous price.

I would definitely pay double

trufflesnout · 15/08/2015 09:31

What price they then sell it to their retail customers whether that is full price or as a loss leader really has nothing to do with the price they pay farmers.

This. Thank God. A thread where people are finally getting it!

justwondering72 · 17/08/2015 07:27

Farmers need to get together and insist on higher prices. It's difficult being a one man band farmer, maybe they should be more like Tesco and band together?

I grew up on a dairy farm, though my folks are retired now. They were lamenting the loss of the Milk Marketing Board, a state organisation whose job was to act as the middleman btw farmers and buyers, setting a fair price for milk and other dairy products as well as overseeing other regulatory functions. The MMB, and many other such bodies, were all done away with as they stood in the way of all-out competition, letting the market (and hence the most powerful players) decide. Today's situation is a direct result of that.

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