A bastion of privilege?

How quickly they forget!

It’s less than a year since most of our biggest retailers and dairy processors got stung with big fines for fixing the market for milk.  They had manipulated the market to overpay producers and overcharge consumers.  Now they’re doing exactly the same again, as the militant wing of the producers lobby applies pressure to pay them above market rates!

The underlying problem appears to be that most of the media and government always take the producers side.  Indeed, our supermarkets stand more-or-less permanently accused of screwing their suppliers, and have faced one price-fixing investigation after another.  So it’s all the more ironic that the only actual wrongdoing happened when they gave in to pressure from the farming lobby (which included media and indeed government of the day) and overpaid in 2002/3.

So far this time round it looks a lot like a repeat.  Militant farmers blockade someone and issue press releases “we’re being paid less than the cost of production”.  Media parrot the press releases without any questions of the kind they’d ask any normal business (“can’t you reduce those production costs?  For example, keep that range rover a second year before replacing it?”[1]).  Indeed, media go even further: sometime they positively incite further “direct action”, for example in an interview with one of the militants on the PM programme on Saturday.  If you want to listen, it’s near the beginning, but this link is probably only available for a few days now.

Why does this farmers lobby (unlike most trade unions making similar demands) always have the media so firmly on-side?  Could it be because of the association of farmers with landowners: the old aristocracy whose privilege cannot be questioned?  If upstart newcomers benefit, that’s by-the-by, and as for tenant farmers (the ones who really aren’t rich), higher prices will just enable their landlords to charge higher rents, and vice versa, in the medium term.

Who will get fined this time round?  Apart from the long-suffering consumer, of course.  Fortunately I’m a lot richer than I was in 2002/3: milk is one of many things I can easily afford now but had to do without most of the time back then.

[1] Of course not every farmer has a new range rover every year: most of them are busy getting on with the job.  But it’s precisely the kind of production cost that enables them to ‘prove’ they’re making a loss.

Posted on July 23, 2012, in bbc, farming, media, rants, uk. Bookmark the permalink. 5 Comments.

  1. Yeah, we had ‘milkgate’ in New Zealand last year. Or at least the media tried very hard to get the dairy cartel to admit that it was price fixing. Which said cartel staunchly denied, despite that being pretty much its only reason for existing. Watching the interviews, “farcical” was the word that sprang to mind.

    And our milk did come down slightly in price. Now you can get a litre for a shade under $2. Still considerably more expensive, at current exchange rates, than in the UK.

    Which mainly goes to illustrate that the ‘purchasing power parity’ theory of exchange rates is bollocks. (*Everydamnthing* is more expensive here.)

    The flip side of that, however, is that I’m a resource too, and I get to be more expensive along with everything else.

  2. As far as I can tell, NZ’s dairy industry is concerned primarily with producing milk powder for the Chinese market, so I guess that local consumers don’t feature too strongly in the producers’ equations (I spent last Christmas on a NZ dairy farm and was astonished by the enormous scale of the industry).

    And, yes, I noticed that virtually everything costs more in NZ than it does over here…and the supermarkets were expensive and lousy too. Give me the evil price-fixing Tesco, Sainsbury et al any day! However I’m not sure to what extent their milk price fixing was aimed at paying more to primary producers, or whether it was more about shoring up their own margins and those of the big processors who supply them. In any event, here in the UK the dairy market is distorted by the Common Agricultural Policy and quotas to such an extent that it’s virtually impossible to work out who is telling the truth over production costs, farm viability and so on.

  3. That was indeed their story – “the price is set by global market factors”. The implication being that if shops charged less, farmers would simply be forced, forced I tell you, to export all their milk in powdered form to China, and we’d have none at all in our shops.

    I found the explanation hard to swallow, because the theory that markets set a “fair price” is based on the assumption that the markets concerned are “free” markets. And that’s not a description that can plausibly be applied to China’s consumer market, so it follows that the “price information” it transmits is – pretty much what it’s rigged to transmit.

  4. Indeed, NZ looks more expensive because UK (along with most of our neighbours) economy is plunging. We’ve got a whole lot cheaper for foreigners since we were one of a handful of rich countries in a poor world.

    John, agreed, the CAP and other distortions leave us with something a long way from a free/open market. But that doesn’t excuse the media parroting a press release as fact, leaving its message completely unchallenged. A bit of old-fashioned deference, in a country where the feudal system still rules our gut feelings so that land is the only ‘respectable’ form of wealth and its owners are a cut above the rest of us!

  5. Also, addressing your core point: I agree that land ownership is indeed the strongest guarantee of privilege. If you think about it, it’s obvious why this is the case: land is the ultimate scarce resource, there simply is no more available – not since we stopped sending people to the Colonies, anyway. So those who own it, guard it very, very jealously.

    (And they know that anything that undermines anyone’s claim to land is a threat to them all. So all rich people, even those who would be happy to pay higher taxes in money terms, will close ranks when anyone suggests that land should be divided more equitably. You remember how the press went berserk when Robert Mugabe started confiscating land from white farmers? He’d already been misruling Zimbabwe for 20 years without so much as a peep out of the British press – but start taking away people’s land, and suddenly he was Satan incarnate.)

    I have a theory that this is why “intellectual property” is such a hot topic: it’s a way of magicking into existence more “property”, which its owners fondly imagine is like virtual “land” allowing them to get rich off rents without ever lifting another finger, which is of course every good capitalist’s dream. But that’s another rant.

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