Thanks for all your comments & info - it is only for my personal understanding as we do not hear much about the US milk trade here in Europe.
The UK Environment, Food & Rural Affairs committee have today issued a report calling for protection of milk price paid to farmers:
Milk producers need greater price protection - News from Parliament - UK Parliament
As with all government reports, there is a big swing away from previous policy as they say "In its report, Dairy prices, the Committee also seeks an EU-wide review of the milk intervention price and calls on farmers themselves to consider forming Producer Organisations to increase their market clout."
This would appear to be the total opposite of their previous opinions which for many years made it difficult for large farmer owned businesses to take greater control of their industry without being accused of forming a monopoly. Although it is now ancient history, it's important to remember how UK milk production has developed into it's current fragmented industry...
In 1994 the UK milk industry was de-regulated - for the previous 60 years there had been a government owned Milk Marketing Board (MMB) which guaranteed a minimum price for all milk produced by British farmers. All milk was collected by and passed through the MMB. Follwing re-regulation, farmers could choose who they wanted to supply their milk to on a free market basis, and the majority choose to form a farmer owned co-op called Milk Marque.
Because Milk Marque controlled the majority of UK production, in essence it continued to operate in a similar manner to the MMB with decisions taken by Milk Marque having a direct affect on the retail price of milk in the UK - even the milk sourced from the other dairy companies. Because of this the government intervened, claiming Milk Marque was exploiting it's monopoly within the industry, and the co-op was split into three small independent farmer owned co-ops. This caused a shift of power away from the co-op's and gave the direct supply private dairy companies (which generally are not farmer owned) a chance to increase their own supply by initially offering milk prices above the market value, tempting farmers away from the co-op's.
Of the three UK co-op's formed from the break up of Milk Marque 15 years ago, only one truly remains - First Milk. One co-op, Dairy Farmers of Britain went bust in 2009 and the other co-op, Milk Link, merged with Arla (a european milk buyer) in 2012. While Arla Milk Link are still often referred to as a co-operative, in reality their UK farmer base owns a very small proportion of the EU business and therefore now has little control over their own destiny.
The forced breakup of Milk Marque and the negative subsequent approach by government (who were scared farmers could form another "monopoly"), undoubtedly restricted the ability of farmer co-op's to grow at a time when non farmer owned companies were able to take free advantage of the market. Once they had control, the majority of direct supply buyers reduced the price paid to their farmers and this has in part created the situation we see today where UK farmers are selling milk below the cost of production.
Another mistake made by the UK government was that they considered the dairy co-ops could potentially hold a monopoly over the UK market - despite the fact that at the time all UK farmers were being told that they must start trading on the global markets and so needed more strength to do so. Prior to the merger of Milk Link and Arla there were plans for First Milk and Milk Link to merge. Had this merger proceeded, the UK monopolies and mergers commission would almost certainly have intervened for fear of affecting retail prices - yet merger with an overseas company was allowed unhindered .
The report today appears an indication that maybe the EFRA committee finally realise that farmer owned businesses such as First Milk should have been allowed to take a larger share of the market years ago and not be unfairly restricted - the result would have benefited the majority of dairy farmers, regardless of which company they supplied and helped create a fairer market place in the UK better reflecting the real value milk as decided by UK dairy farmers.
From what I have seen of comments from our American cousins on here, it would see most US states still allow their farmers to have an element of control over their industry which hopefully enables your farmers to plan ahead in a way UK farmers cannot do at present.
