Cheap Food vs Food Security

Tweet It has taken a lot of hard graft by farmers and their unions to push up the price of milk at the farm gate over the last year. The price had previously been forced downwards by supermarkets in a price war, and the suggestion that the supermarkets may be about to start another price war over milk is of concern to many in rural areas.

There's nothing wrong, of course, with the supermarkets competing for customers by selecting certain products and cutting their prices. Few consumers will complain about getting the foodstuffs at a lower price. 'Loss leaders' have long been a staple weapon in the competition between retailers. But 'loss leaders' should be exactly that; and supermarkets should expect to take a loss on them.

What is unacceptable is for the retailers to arbitrarily drop their prices of staple products and then use their buying power to force producers' prices down, beyond even the point at which producers make any money at all. When they do this, the retailers protect their own profits and margins, so they lose little or nothing by introducing price cuts - and the winners of the price war may even increase their overall profits by drawing in more customers. The real losers in such a price war are the producers.

Ideological supporters of the free market might argue that it doesn't matter – there's plenty of milk around, and the retailers can simply buy it from elsewhere if the farmers won't match the prices which they are willing to pay. That may make ideological sense, and it may make economic sense to the supermarkets who look only at their own profit and loss; but it does not make sense in social or environmental terms.

'Food miles' is already a significant issue, and food security will soon be another. Food production is not something that can simply be turned on and off like a tap – capacity lost now will take many years to restore later. It is in all our interests to ensure that we have a viable agricultural sector in Wales, and that short-term game-playing by the major retailers is not allowed to destroy our production capacity.