Wednesday, 15 April 2015

Ownership Matters: The Conservatives and Housing: First as tragedy Second Time as farce.



I always thought that Mrs Thatcher was a crude Marxist. She had a base and superstructure view of society the idea that the economic base determines the social, cultural and ultimately political shape of a society.  Her simply view was if you turned people into individual house owners they would become Tories.

The privatisation of publicly owned homes, the largest privatisation of all, had in some cases that desired effect. It didn’t with my parents they bought their council house, a brand new house when they moved into it for about a third of its value, but they never stopped voting Labour.

When you are on a modest income, however principled you are, it is hard to turndown a large gift of tens of thousands of pounds.  Of course the Tories never really wanted us to own our homes. If the Miners back in 84 had “owned their own homes” they would still be on strike now.

No they wanted us in hock to banks and building societies. Large debts make it more difficult for workers to take industrial action. Psychologically however it would be wrong to say this was not a vote winner for the Tories.

The long term effect has been a tragedy. Effectively they replaced a reasonably well regulated public social housing sector with an unregulated private rented sector causing a huge increase in rents and in the subsidy for private landlords in the form of housing benefit.

The data is interesting the peak for social renting was 1981 with 31.7% of households and about 11% private rented. However by 2013 social renting was down to 17% and private renting had overtaken it at 18%.

Interestingly there was as a result of the Tory policy an increase in home ownership from 57% in 1981 up to a peak of 71% in 2003. The decade since has seen the first generation of privatised council houses coming back into the market many have been snapped up by buy to let landlords and the ownership numbers shrunk back to 65% by 2013 and the falling trend seems set to continue despite government programs promoting home ownership.

Now we have the farce. Today the largest social rented sector is Housing Associations partly driven by organic growth and partly by large scale council house stock transfers.

Now the Tories want to destroy this sector too. It is worth noting that around 800,000 housing association tenants already have “the right to acquire” but at considerably lower subsidies than for Council tenants.  The long term implications of Associations being forced to sell property at a loss would be devastating.

The Tories seem to have forgotten that these are private organisations and secondly who is going to lend them money to develop new property if they have to sell it before recovering the cost?

As for accelerating the sale of Council homes, the trouble with privatisation is you cannot sell things twice.

Don’t think that because this policy, in terms of improving Britain’s chronic housing situation, is bonkers means that it does not make sense.

This policy is part of a wider pattern of unlocking assets that are held collectively. That is what George Osborne’s pension reforms are about, that is really what the original Council house privatisation was about; when you know that this is what is going on the pattern is clear.

With low economic growth capital needs to open up new assets that are owned collectively and bring them onto the market. This process began with an attack on state owned assets then it moved onto other collectively owned assets like the Building Societies and now Housing Associations.

This is ultimately about the transfer of assets from the poor to the rich.  Ultra low interest rates mean that investors are looking for more diversified returns. Look at the way they have moved into the private rented sector in London. Those same low interest rates mean however that the rich can borrow to buy assets cheaply whereas someone on a zero hour contract cannot even afford to save let alone get a mortgage.

Then they service the debt by kindly allowing us to rent the things we once owned back from them. Railways, energy, water, our homes, post and telecoms, higher education, next they will come for healthcare and schools.

James Meek’s detailed account of the disaster that is privatisation, Private Island, (Why Britain Now Belongs to Someone Else, Verso, 2014) is a well written book by someone previously known for fiction has now been shortlisted for the Orwell prize.

 Some of the things he uncovers sound like fiction like the fact that when Enron collapsed it owned Wessex water!

His key point however is one we should all remember in this coming election that tax can be kept low because as our national assets are sold, these private businesses become effectively tax gatherers. As we the ordinary citizens are handed over to these private tax-gatherers, the greatest burden of taxes shifts onto the poorest.

As Meek points out, “The essential public good that Margaret Thatcher, Tony Blair and now Cameron sell is not power stations, or trains, or hospitals. It’s the public itself. it’s us.”  No wonder we see income inequality reverting to the pattern before the First World War as the pattern of ownership in the economy heads that way too.


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Monday, 30 March 2015

Co-op Docs Next Chapter in Island Story




After a recent at meeting at Co-ops UK we where chatting about who should be co-op of the year. I said my nomination would go to the Channel Islands Co-operative (CIC) Society.  Founded in Jersey in 1919 having survived the occupation it is a credit to the movement and shows how co-ops can genuinely support the communities which they serve.

With 34 percent market share the CIC is the biggest retailer in the islands. That dominance has to be won everyday and it has never rested on its laurels. With a finite customer base it has always sought out new ways in which it can bring value to its members.

In some ways the people of the Channel Islands (population 165,000) and the CIC (membership 120,000) are one and the same as almost the entire adult population are members of the society. That relationship has been consolidated in the last three years as it has paid out over £8 million per year in dividends to its members.

Clearly there are limits to growth in any one business in such an enclosed economy so CIC has an amazing breadth. Its £160 million turnover came from food, furnishings and leisure retailing, travel services to both individuals and businesses, the provision of financial services to its Members, the sale of petrol, Post Office services, funerals and pharmacy.

So pretty much every consumer service you would need is provided by in twenty seven different stores across the islands. Apart from the quality of service and the tremendous member dividend, it is integral to island life, employing a thousand people, spending over £11m on local produce each year and £200,000 supporting local good causes.

It has not all been plain sailing whilst the type of competition they face is different to the mainland there is still stiff competition particularly in food but also on other products. They are not immune to the arrival of internet shopping. So they have had to take some tough calls on reducing costs in wharehousing.

Making the decision to end their local wharehousing facility and rely on the mainland proved to be real test of their democracy. With over seven hundred people packing the egm to discus the issue before it was finally agreed

Their latest move to support members however is quite extraordinary. This is their move into medical services. In the Channel Islands there is a patchwork medical service a mixture of subsidy from the different islands, Jersey and Guernsey Governments and private insurance schemes. Basically you are charged every time you visit your GP and as doctors practices are private businesses the fees charged vary tremendously with them being free to charge what they wish.

Colin Mcleod CEO of CIC says, “I have been asked about the rationale behind our decision to offer a new, more affordable GP service and the answer is really very simple: we have listened to our members. They would like their healthcare to be more affordable, transparent and easily accessible. A survey conducted by the Jersey Consumer Council showed us that a lot of islanders felt the same way.”

Co-operative Medical Care, which consists of three GP practices, spread across Jersey, is focused on helping islanders pay less for high quality healthcare, particularly families with young children. A standard consultation fee is £30, and Society members will receive free healthcare for children under five and lower prices for children aged five to 18.

To form Co-operative Medical Care, CIC has bought two established GP practices. Four doctors, a practice nurse and eight existing surgery staff are now employed by the Society which plans to engage more healthcare professionals as demand for the service increases.

As Co-operative Medical Care is owned by Society members, rather than GP partners, profits will be shared by members in the form of and 4% dividend on healthcare services.  Since launching in November, Co-operative Medical Care has attracted almost 600 new patients with growth exceeding expectations. To support the strong uptake, two new doctors have joined the practice.
Phil Romeril, Head of Healthcare at CIC, said, ‘We are very pleased that there has been such a positive response to Co-operative Medical Care. It was always our intention to grow if the demand was there.”
It maybe surprising to get a divi from a visit to the doctors but this Co-op is taking primary care out of the private sector and bringing it into social ownership. This co-op has done something that Aneurin Bevan failed to do that is turn GP’s into employees instead of businesses. To say this has stirred up GP services on the island is an understatement.
The lesson from Jersey could be a look to the past or a pointer to the future maybe it is something we may need to do here on the mainland. What happens on May 7th could well be the decider in that.

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El Sistema @ 40



I am lucky that I have easy access to two world class state supported arts institutions within easy reach of where I live, the Royal Shakespeare Company and the City of Birmingham Symphony Orchestra.
On leaving recent productions of Loves Labour’s Lost and War and Revolution in Stratford and Birmingham I was a better person my the experiences had added immeasurably to the quality of my life.
A lot of working class people are educated to believe this sort of art is not for the likes of them. As if Shakespeare had nothing to say to working class people or that the Shostakovich in the CBSO concert was just for toffs.

William Morris describes how the production of his art left him “ministering to the swinish luxury of the rich”. Here we are over a hundred years later and we are still at it with the working class pacified with a tidal wave of celebrity pap. And don’t get me started on Clarkson the cultural wing of UKIP.

As a precocious teenager I used to read the Listener (OK I was a bit pretentious) I read about classical music, theatre and poetry helping me to understand what I found on Radio 3. Like Robert Hughes I became, “an elitist in the cultural but emphatically not in the social sense.” I appreciated the great craft that went into producing great art and hated the fact that many talented people where denied the opportunity to develop that craft.

I thought that by the time I grew up, everyone would listen to Radio 3, read poetry and broad sheet newspapers and of course watch films with sub-titles. In stead we got the X-factor, Hollywood films with a reading age of eight, Damian Hurst and the Sun.

Then for a while half the adult population seemed to reading children’s books like Harry Potter and Neil Postman’s thesis that we where ‘amusing ourselves to death’ seemed to be coming true.

There are ways to hold back this cultural decay. We could take the best of what we know to everyone. That is what Jose Antonio Abreu did in 1975. At that time there where two professional symphony orchestras in Venezuela employing largely Eastern European musicians.

To day there are dozens full of local talent. A far cry from when Abreu gathered eleven youngsters in an underground car park and told them they where making history. The next rehearsal saw 25 turn up and the ball was rolling. Now 40 years later the National System of Youth and Children’s Orchestras, El Sistema, has hundreds of thousands of participants.
The basics of the Sistema are simple. Children as young as two are given daily instrumental tuition in return they are expected to join an ensemble. Public performance is an integral part of the program including family and community members in their progress.
Get them before any one tells them this kind thing is not for them. Now hundreds of thousands of youngsters the majority from poor homes are engaged in a process of human development. As Abreu says, “An Orchestra means, joy, motivation, teamwork, the aspiration to success. A big family dedicated to harmony.” 

“El Sistema gave our society two priceless gifts: the gift of appreciating beauty, and the gift of striving for artistic excellence,” says conductor Gustavo Dudamel just one of the great talents it has produced.

He features on the prestigious Deutsche Grammaophon CD, El Sistema 40, A Celebration a delightful compilation of recordings of the Simon Bolivar Orchestra. I whole heartedly recommend it but only as a starter. The vigour and attack by both the Orchestra and the String Quartet on these mostly live, recordings will I am sure leave you wanting more.
They deliver such gusto to the Latin American sounds of Revueltas and Ginastera but also show they can do Beethoven as well. One to savour for classical aficionados there is also their earlier recording of Mahlers Seventh.
Having discovered its self-confidence under the inspirational leadership of Hugo Chavez, Venezuela has reappeared on the radar of the ‘Empire’. Whilst preoccupied with events in the Middle East the USA disengaged from what was happening in its back yard becoming isolated from the rest of the Americas.
It has made a tactical shift with regard to Cuba but make no mistake the USA is trying to regain control over the lands south of the Rio Grande. In declaring Venezuela a threat to US security Obama is trying to turn the clock back. This throwback can not be allowed to stand clearly Obama has not read, the ‘Open veins of Latin America’ by Edwardo Galeano, presented to him by Hugo Chavez.  
Meanwhile you can show your solidarity by listening to the open heart of Venezuela and its unique musical community with EL Sistema 40!

Monday, 23 March 2015

Is it Time for a Fresh Look at Co-op Politics?



When I was young I had a clear trinity of values. At work I joined the union, at elections voted Labour and I shopped at the co-op. The intertwining of these activities, I was a union, Labour Party and Co-op member meant never having to think about the quality of representation this formula delivered for its components.
Today these relations are under severe strain as each part of the triumvirate reacts to the changes driven by neo-liberalism. The Tories saw this on coming into office and sought to exploit it by promoting the social economy, seeing it as having a role in job creation, improving public services, and even in reforming the role of government itself. Remember all the talk of the John Lewis model, mutualism and the Big Society?
It did sound nice, and some co-operators did try hard to engage until it became clear just how little the right understand, or in fact really care about, the social economy.
For the Cabinet Office co-operatives and mutuals where a cover for privatization, public sector workers, coerced into joining some pseudo-mutual is a travesty of co-operative principles. Membership must always be voluntary, governance democratic, and the whole purpose is to serve their members and their communities for their common benefit – not as a transit lounge into the private sector.
For the Right, the social economy is often viewed as a final refuge for the discarded victims of capitalism. This is why they advocate charity as the proper response to poverty never solidarity or equity.
Tragically the truth is the previous Labour government did not really get the social economy either.
It is composed of civil organizations and networks that are driven by the principles of reciprocity and mutuality in service to the common good – usually through the social control of capital. There are co-operatives, non-profit organizations, foundations, voluntary groups, and a whole range of associations that operate both inside the market, as many successful co-operatives and fair trade groups do, or in non-market provision of goods or services.
These include in cultural production, the provision of health or social care, and the provision of food, shelter, or other necessities to people in need. In its essence, the social economy has the potential to be a space where economics is at the service of social ends, not the other way round.
I suspect in a neo-liberal world these ideas just do not compute. The Right has used the social economy as a proxy for the promotion of capital and markets, and the Left has consistently viewed the social economy as a vehicle for the delivery of what should be state functions through a form of clientism. Look at how many of our largest charities are now dependent on state funding.
This has both stunted the growth of the mutual and co-operative sector and turned workers away from seeing them as a genuine vehicle for social change.
So imagine my delight and surprise when I read the Co-operative Party’s agenda for Britain. Karin Christiansen, the General Secretary, and her team have produced a very substantial piece of work. Many of us thought she was a too close to the Labour Party and too far away from the Co-op but this shows that is not the case.
This is a real attempt to take a genuinely comprehensive co-operative agenda into government. I may not agree with every dot and comma but if an incoming Labour Government implemented half of it I would be a well chuffed co-operator.
Sadly this comes as the Co-operative Retail sector has suffered a massive loss of confidence and in drawing in its horns has lost the will to see a role for itself as a champion of a wider co-operative future.  
If I was designing a co-operative political entity at the present time I don’t think it would look like the current Co-operative Party. But let us not pretend that doing without it would end our need to engage politically.
Other large scale retailers spend a fortune on political engagement but do so under the radar. Our crime is one of transparency. In recent years Tesco, for example, have retained at least ten different political consultant firms as lobbyists at any one time.
The current elections for the Co-op Group, in which I am a candidate, will elect the first Council of the new regime. In my opinion dumping the Co-op Party would not be wise as it will be the devils own job to recreate something like it. Yes it needs some radical reform so we need to buy some time after the general election to work out what we best need to drive the co-operative political agenda into the future.
At that point we should seek the members’ endorsement for a sensible program of political engagement. The huge victories for political funds in the trade union ballots should give us confidence in such a strategy.
In the meantime if you support a more co-operative future get your Labour Candidate to endorse this program. Go to: http://2015.party.coop




Thursday, 12 March 2015

Japanese Farmers-Co-ops Under Pressure with Free Trade Deal




The threat from the Transatlantic Trade and Investment Partnership, the drive for an EU/USA free trade area, widely perceived as an attack on democracy is now well known. Less well known is the parallel deal that is being cooked up between the USA and eleven countries across the Pacific, the Trans Pacific Partnership (TPP).
In Japan the leading opponents of this deal are the Co-operative movement especially in agriculture. JA-Zenchu is one of the world’s largest co-operative organisations, the umbrella organisation of the Japanese farmers’ co-ops; it supports farmers, markets their produce, provides their inputs and acts as banker and insurer for their businesses.
JA-Zenchu has taken the lead gathering other groups including consumers, health care & medical, forestry & fishery, and construction into joining the anti-TPP movement. The consequence is they have become a target of the government of Prime Minister Abe.
The TPP negotiations seem quite advanced; I say seem as all we know comes from leaks. Some details of the trade deal have been published by Wikileaks where they look to include provisions on food safety, intellectual property and copyright issues that are usually outside the boundaries of trade deals.
To those who have followed TTIP this is unsurprising as the TPP negotiations have included 600 corporate advisers, including representatives of Halliburton and Caterpillar.
The whole process is mired in secrecy even the US Congress won’t have access to the details before it is signed.  Senator Bernie Sanders, has called the TPP “disastrous” and said it is “written behind closed doors by the corporate world”, he denounced it as designed “to protect the interests of the largest multinational corporations at the expense of workers, consumers, the environment and the foundations of American democracy.”
In Japan “Abenomics” consist of a set of what the PM calls three “arrows” the usual neo-liberal claptrap, namely ultra-aggressive monetary easing, more fiscal spending and structural reforms.
It is these “structural reforms” that spell danger for Japans Co-op farmers. The Government is keen on “reforming” the co-ops, which it regards as an interest group protected by regulations. The reforms include a plan to strip the JA-Zenchu, as the Central Union of Agricultural Co-operatives, of its power to audit local co-ops and check their activities.

This looks like a small step but is part of a wider attempt to restructure Japanese agriculture.  The Government has a blueprint for increasing the ‘competitiveness’ of farmers through the consolidation of farms, expanding the entry of business corporations into the sector, and the development of products with higher added-value.

This would be accomplished by strengthening the management base of farmers and through closer “co-operation” with food-related industries, including the food processing and distribution sectors.
Japanese farming consists of large numbers of small-scale farms many located in particularly mountainous areas. How “consolidation” would work in these conditions is not explained. Like many mature farming economies farmers are aging and many have no one to take over when they retire.
There are young people interested farming and it would be simpler to help them start farming careers since they could play a part in revitalizing the sector and the rural economy but that would not help the global agri-business industry.
Given the geography of the country a key aspects of Japanese farming is its role in land conservation and environmental protection. Needless to say they have failed to show how the plans will help.
Whilst JA-Zenchu has consistently contributed to enhancing Japan’s agriculture by providing farmers with distribution, financial services, and management advice also it collectively purchases materials needed for farm production and markets their products.
More politically sensitive it the Japanese Agricultural Co-op movement is strictly non-GM and consumers are very particular when it comes to provenance having some of the highest food standards in the world. Backed by strong co-ops this has restricted US agri-business getting a foothold.
JA-Zenchu as well as supporting farmer co-ops is a huge financial services and banking business. As well as bursting open the farming industry to US Agri-business the suspicion is that the Abe Government is after the huge assets the JA-Zenchu has in banking and financial services.
Yoichi Tashiro, a professor at Otsuma Women’s University and an expert on agricultural economics, believes Abe has tried to weaken JA-Zenchu in order to promote negotiations for the proposed TPP trade agreement.
Tashiro says that Abe is trying to play up the political battle with JA-Zenchu because it is the keystone of the whole anti-TPP movement in Japan. The UK Co-op Sector is in solidarity with our Japanese colleagues in this fight.
It is time we all woke up to what is going on here. If these deals are so good for workers and consumers why are they so secretive?

Thursday, 5 February 2015

Syriza is Greek for Hope



“Tis not enough to help the feeble up, but to support him after.” Timon of Athens.

I have been ill with a nasty chest infection but that has not stopped me having a smile on my face. Put there by two remarkable events. As a Black Country bloke I was chuffed that the poor relations of Black Country football, Walsall FC, at the 127th attempt have finally made it to a Wembley final.

Who cares what the trophy is or who they play. If any town needs a lift it is Walsall. Economically they have never recovered from the manufacturing jobs slaughter of the Thatcher years. It’s not much but it’s great that the dispossessed get a day in the sun.

The other is the news from Greece. Despite everything Syriza have won the election. This is the most important election victory in Europe for the left in the Neo-Liberal era.

The fact that such a movement has been necessary represents the total failure of European Social Democracy. The only thing that is keeping it alive is inertia. No longer a movement it has sold its soul to neo-liberal economics and neo-conservative politics.
   
The great SPD in Germany are supporting Angela Merkel!  Mario Renzi the PM of Italy and leader of the Democrats, is described as the Tony Blair of Italy. In Spain PSOE has fallen from grace due to economic mismanagement and corruption.  The mighty PASOK reduced to a rump. And as for Francois Hollande and the French Socialists what a disappointment! 

It looks naïve now to assume that social democratic parties would take a strong stance in defence of their working class supporters. Whilst the rich get away with murder the Social Democrats mutter incoherent pathetic austerity-lite policies, desperately trying to sound “responsible”, policies that tinker around the edges (the Mansion Tax!) in fear of upsetting the ruling elite.

An elite that gets richer on the backs of those below, by cutting wages, slashing benefits, crushing unions, avoiding tax and by diverting a huge proportion of our national wealth to financial speculation.

They have also used their wealth to reshape the policy world we hear their words in the voices of Mandelson, Blair, or Milburn everyday on how we should dilute and moderate demands that are already so feeble as to be meaningless.

What is on offer here?  Well the difference between a future with George Osborne or Ed Balls seems to be choice in the method of execution. Osborne offers the hangman’s noose. Whilst Balls offers us the slower method of being garrotted.

The end result is of course the same. For the traditional far left too has failed. Even in states with large Communist and Workers Parties they have little traction with the electorate, the IU in Spain, the PCF or the KKE have made little headway.

People are crying out for change and yet there is no voice for the food bank user or the bus passenger, for the zero-hour contract worker, in short for the victims of the cruel hoax that is austerity.

This pain has been expressed by the rise of the nationalist, populist rightwing UKIP, but whose fault is this. I fear the Labour Party has been insensitive to the pain of those disorientated by globalisation or hurt by austerity. Labour’s tragic reaction to the Scottish Referendum shows that it is incapable of renewal.

Thank goodness then for Syriza, whatever happens now they have already changed the game. Alexis Tsipras is breath of fresh air. What they have achieved, I know in remarkable circumstances, is amazing. This is a study in effective leadership. In understanding the situation and building an effective response. The press have patronised and underestimated him and the movement at every turn.

This is not a one man band either. After studying maths and statistics, Greek Finance minister Yanis Varoufakis received his economics doctorate from Essex University. He was a Fellow at Cambridge, Lecturer at Sydney University before returning to Greece as Professor of Economic Theory at the University of Athens. He describes himself as an “accidental economist”. I wonder what this makes George Osborne?

The solidarity model of party organisation is also one we can learn from. Some complain that they do not use the “left-wing” politics playbook. As if our methods have go us anywhere.

As Paul Krugman points out if anything the problem with Syriza’s plans is that they are not radical enough. Debt relief and an easing of austerity may not be enough to create the growth they need but the Greeks are not yet ready to leave the Euro.

“Still in calling for major change, Mr Tsipras is being far more realistic than officials who want the beating to continue until morale improves. The rest of Europe should give him a chance to end his country’s nightmare.”

My fear is for a Labour election victory on a small share of the vote with its present policies. That would lead to disaster. We have failed to change their policies from within. Pressure now needs to come from without. The way we can help both Labour and Syriza is to stop our bickering on the left and build our own anti-austerity party. I know we are not Greece but if they can pull together thirteen parties surely a UK Syriza is the best way “to support him after”.

Thursday, 22 January 2015

China, Russia and the Price of Milk



At last Ministers have begun to wake up to the crisis in the dairy industry. The fear in many rural areas must be that the Tories will let dairy farmers go the way of coal miners.  
Interestingly there is one Conservative MP trying to stop this happening. I have some sympathy for the challenges that Jim Paice is the chair of First Milk, the Dairy Farmers Co-operative is having.
The dramatic changes in world milk prices have created a multimillion-pound cashflow hole in First Milk and for the1,300 farmer members who have been called upon to help bail it out. For these farmers they are tough times having their payments delayed and to be asked for a big increase in capital contributions to the Co-op is a double whammy!
For all dairy farmers the problem is that milk has become a globally traded commodity. Prices went up when new markets opened up in Russia and most importantly in China. With more women working and a series of crises in domestic Chinese supply the door was opened up for the large players to enter the Chinese market.
However what goes up can also come down. The round of price cuts in Europe began when Arla the huge transnational Scandinavian, German and British co-op announced last August it was slashing milk prices because weak prices had been made worse by the retaliatory sanctions that Russia has imposed on the EU.
This is on top of record UK output and the cut throat prices amongst UK supermarkets which often see milk sold at prices cheaper than water. It may seem like a left wing cliché but the crisis in the industry can be traced back to Mrs Thatcher.
Farmgate milk prices used to be set by the statutory Milk Marketing Boards, covering England and Wales and Scotland. The boards established prior to the War bought milk from farmers and sold it to processors and dairies. This perfectly rational system of natural monopolies was destroyed when the Tories, those champions of the countryside, abolished them in the Agriculture Act of 1993 leading to the collection and distribution of milk for processing being deregulated.
Since then global influences have increased. About 10% of the world’s milk is globally traded in the form of milk powders, cream, butter and commodity cheddar. Prices are set in three big producer areas in the US, the EU and New Zealand.
One of the world’s largest co-ops is the New Zealand Dairy co-op Fonterra. It is the worlds leading global milk processor. Processing over 15 billion litres of milk a year in New Zealand together with 2 billion litres from Australia and nearly 3 billion litres from Latin America. 

Fonterra own GlobalDairyTrade which is an auction platform for internationally traded commodity dairy products. Its website says it was “Established in 2008 to provide a reliable, transparent, price discovery platform for globally traded dairy commodities.”  The auctions occur twice a month, bringing together hundreds of qualified bidders from more than 90 countries, with a range of sellers from Europe, USA, India, Australia and New Zealand.

Now the Chinese economy has been slowing reducing the demand for imported milk much of which comes from New Zealand so this has affected the price Fonterra can get for their milk releasing it onto the world market.

Meanwhile the EU price for milk set in Euro’s so farmers have also to be currency speculators then from April 1st the EU milk quota system ends meaning Europeans can increase production just in time for a global slump in the industry.

Dairy farmers now find themselves not knowing how much milk to produce or how much they will be paid. They have to keep their eyes on the weather, the cost of fertiliser and on economic growth in China.

We are self-sufficient pretty much in the UK in liquid milk although we do import around £1.3billions worth of cheese, butter and yoghurt. If we allow theses trend to continue it can only lead to the destruction of more dairy farms and increase the pressure for the introduction of mega-dairies at only knows what cost to animal welfare and the landscape. 

There is a powerful argument that we have abrogated responsibility for our food security to the EU who cares more for the spivs and speculators in international markets. Clearly we need to regain control of our agricultural sector from the EU so we can rationally plan for the future recreating a properly regulated modern milk marketing system.

In the short term British dairy farmers need stronger co-ops. Farmers Weekly recently argued that, “There’s a thought that British farmers don’t do co-ops like their continental cousins, that they take a shorter-term, more individual view.” Well if that is their view it can only lead to their destruction.

Fonterra and Arla co-ops are serious players in the industry; there is surely a lesson here for First Milk farmers get behind their co-op.