Greens want to keep milk price high

22/08/2012

Remember how the Green Party was concerned about high milk prices in New Zealand and wanted something done to make it cheaper?

They’ve changed their tune now and want to keep Canadian milk prices artificially high.

They don’t say that explicitly but that’s what their oppositionto the Trans Pacific Partnership  which would remove agricultural regulations such as Canada’s supply management system for dairy, which aims to preserve farmers’ livelihoods would do.

These farmers’ livelihoods are being paid for through higher prices for dairy products paid for by tax payers and consumers.

A free trade deal which opens the Canadian market to dairy products from other countries – including New Zealand and their closest neighbour the USA – would improve the range and lower the prices for consumers.

It would make life more difficult for some Canadian dairy farmers just as removing subsidies in the 80s did for farmers here, but I don’t know a single farmer who wants the protection back.

Once  Canadian farmers adjust they’ll find they are much better off answering to the market rather than to politicians and bureaucrats and consumers. If they’re not they’ll follow market signals and swap to a different land use from which they can make a decent living without the need of protection or subsidies; or they’ll sell to someone who can cope with the real world.

As Anti Dismal says:

 . . . Some Canadian farmers can’t make a living without regulation and protection, so they should be doing something else. Also the farmer’s lifestyle is costing Canadian taxpayer a huge amount. De-regulation would remove much of these costs to the Canadian taxpayer.

Hasn’t Metiria noticed that New Zealand de-regulated its farming in the 1980s, and yes some farmers went under, but today farming is better and stronger then it ever was under the old protection and regulation regime. . .

Kiwiblog nails it:

. . . So the NZ Green Party is against NZ dairy farmers being able to have fair access into Canada!!! Their concern is to protect inefficient subsidized Canadian farmers, not to help NZ farmers export more milk. . .

. . . The Greens basically don’t like trade. They voted against the FTA with China which has seen us export an extra $12 billion to China since it was signed. They want Canada to keep up its tariffs of up to 300%.

As the most remote developed country in the world, trade is vital to our future. Yet, the Greens want to kill it off. . .

The Green party wanted New Zealand farmers to subsidise New Zealand consumers when the price of milk increased here. Now they want Canadian taxpayers and consumers to keep subsidising Canadian farmers and keep New Zealand produce out of that market.

Any subsidies or protection is unfair and expensive to taxpayers, consumers and other producers.

This is the party which says it promotes fair trade but it doesn’t accept that if it’s not free it’s not fair.


It’s the market that matters

15/07/2012

Quote of the day:

. . . It’s not the market’s job to consume milk as and when the farmer produces it. It’s the farmer’s job to produce milk when the market needs it. . . Dr Jon Hauser

In New Zealand, as in Australia about which Dr Hauser writes, milk supply is mostly seasonal.

That is less of a problem here when most of our milk is turned into milk powder, butter or cheese and exported. In most other countries most milk is consumed domestically in fresh liquid form and demand is relatively constant regardless of any peaks or troughs in production.

But regardless of what happens to the milk, the underlying principle is the same – it is up to producers to meet the market in terms of quantity, quality and price.

This is a concept which European and British farmers who have been protected from the market by subsidies are struggling to grasp:

Up to 2,000 dairy farmers are expected in Westminster today to protest at cuts to the price they’re paid for their milk. Last year, dairy farmers received a little under 29p for every litre they sold: this is set to fall to less than 25p. Since it costs about 30p to produce a litre of milk, the cuts constitute yet another catastrophe for a benighted domestic industry, and may put many thousands of dairy farmers out of business. “There has been an unprecedented outcry of anger and frustration among farmers,” says the National Farmers’ Union. “We are united in our demand for an immediate reversal” of the cuts.

Prices for farmers have stalled over the last 15 years: in 1997 they were receiving 25p for a litre of milk, while feed costs alone have doubled since 2010. Half of Britain’s dairy farmers went out of business between 2000 and 2010. Like the pig farmers who only save themselves from going out of business by growing their own feed, dairy farmers will likely attempt to make up the shortfall by reducing staff, which will of course have corollary impact. . .

Welcome to the real world, where, as Tim Worstall observes supply and demand rule:

. . . We’re in a rigged market because of the EU. That’s one cause.

But far more importantly, we’ve the standard interaction of supply and demand. Dairy farming is becoming more efficient: as farming has been doing since the Neolithic. That rising food production is what has enabled civilisation to develop. More milk is being produced from less land with fewer cows. It really is not a surprise that prices paid to producers are falling in real terms.

The effect of this is to bankrupt some producers and force them out of production. Which is, harsh though it may sound, exactly what needs to happen. Production is becoming more efficient thus we need fewer producers. . .

A Yorkshire farmer we visited last month said that message was the one good thing to come out of the foot and mouth epidemic.

All his cows were killed and before he replaced his herd he went through the figures. He realised that dairying didn’t stack up for him and rather than buying more cows he increased the amount of crop he grows.

The market matters. Rather than wasting their energy on protesting to politicians, farmers should be working out how to meet it.


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