British Dairy Farmers are in the headlines quite a lot at the moment as they protest over the price they are paid for the production of milk.
The supermarkets are driving down prices to compete with each other and offer this staple of our daily diets as an incentive, indicating to us, the consumer, that if this price is low then the price of other product must surely be low too.
The snag is that the Farmer can’t necessarily rely on other products to supplement their profits and offer milk as a loss leader, whereas the supermarkets may be able to do so.
Actually the problem lies with us, the great British consumer and our apparent race to the bottom of the pricing market for the cheapest products available.
To be fair the Brits have always been known for their love of all things bargain and this may sometimes blind us to the obvious consequences of our need to buy cheaply.
If we continue to buy milk at its low price, some Dairy Farmers may go out of business, if they do the dairy herds will start to diminish. This will hit supply and leave the supermarkets competing with each other over the remaining milk supply.
Guess what happens next? Yes that’s it, they start to outbid each other and the price of milk goes up. Do they then subsidise it and offer it as a loss leader? I doubt it for very long, so the price of milk starts to rise and we have prices that are many multiples of the price we have today. Bye bye bargain, hello expensive staple!
In every market and with every product or service there is a certain elasticity of pricing, but always, the market returns to you get what you pay for.
This holds true for the property market as well, recent articles have dealt with the race to the bottom for sales fees, that are not only unsustainable in the long term, but erode the quality of the service that you can expect when selling a house.
I think that I have already established that Belvoir believe in a good service for a fair price so I won’t go through the argument again.
For now might I suggest that we pay the additional few pence for milk in the supermarkets, if the farmers win their battle to get paid that little bit extra. It might just save us more in the long run and keep one of our long standing industries alive.
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