Tuesday, December 18, 2018
 Commission Raises Alarm Over Dairy Supply Chain Imbalances  

By Guy Montague-Jones

The EU Commission has raised the alarm over the failure of dairy prices at the check-out to follow commodity prices downwards as competition authorities in the UK extend a dairy price-fixing probe.
Milk prices have plummeted over the past year but the dramatic decreases have not been passed on to consumers.
Pricing Imbalance
In a report published this week, the EU Commission said consumer prices of dairy products have fallen some 2 percent since the end of 2007, while commodity milk prices have dropped 31 percent and butter prices have declined 39 percent.
The Commission report concluded that the “EU dairy supply chain does not function efficiently.”
The stability of consumer prices hinders the recovery of the dairy sector by preventing demand from increasing, and pushing producer prices back up.
Furthermore, the gulf between producer and consumer prices is resulting in a distribution of gains from production that was questioned by the Commission.
“This situation also raises serious concerns regarding the distribution of value-added in the chain between farmers, milk processing factories, the dairy industry and retailers,” stated the report.
Milk producer prices are now so low that many farmers are finding it difficult to cover production costs, according to the European Milk Board, which represents EU farmers.
Meanwhile, dairy product manufacturers farther up the supply chain are showing robust financial results.
Just after the EU Commission report was published, the dairy supply chain in the UK came under close scrutiny as more evidence came to light in a long-running price-fixing case.
Price-fixing Probe
The Office of Fair Trading (OFT) accused large supermarkets and diary processors of price-fixing in 2007, alleging that the collusion had cost consumers £270 million.
Tesco and Morrisons both denied involvement in price fixing and restated that view after OFT released a statement yesterday saying it had uncovered more evidence against the supermarkets.
Source: Dairy Reporter

Posted on Friday, July 24, 2009 (Archive on Friday, July 31, 2009)
Posted by bsutton@adpi.org  Contributed by bsutton@adpi.org