Free market doesn't lead to fair prices, say tenant farmers

A return to a fairer pricing system for food would provide a better deal for farmers and buyers compared to the current free-market system, according to a major farming organisation.

The Tenant Farmers' Association (TFA) has spoken out against the accepted mantra that the nation must get closer to, and rely more heavily upon, the marketplace to determine food security.

New rules incorporated into the EU's Common Agricultural Policy (CAP), which is being reformed and will probably come into force in 2015, would help the process, it says.

Speaking before tomorrow's Tuesday'sLivestock 2012 show in Birmingham, TFA chief executive George Dunn said: "As an economist I am acutely aware of the theory of the free market and its ability to ensure a fair allocation of resources for goods and services.

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"But it is just a theory. Its stringent pre-conditions mean that it can never exist in practice."

Mr Dunn, whose organisation has more than 1,000 tenant members in Devon, Dorset, Somerset and Cornwall, said that "slavish reliance" upon the market would "only produce outcomes which favour those who have dominant power".

He quoted this summer's revolt by milk producers against the arbitrary slashing of payments by the big processors and supermarkets, and the furore that saw the latest cuts reversed. Had they gone ahead, many more dairy farmers would have been trading at a loss, an unsustainable situation in the long term.

He explained: "We have seen in the dairy sector where a small number of retailers and processors are able to dictate prices to dairy farmers, until, of course, those dairy farmers reacted peaceably but with force against those reductions.

"We are seeing a similar situation within the pig and poultry sectors, with processors and retailers unwilling to pay primary producers prices that are at least commensurate with the costs of production."

The structure of food marketing in this country had become such that producers faced an unfair and wholly unbalanced platform upon which to do business with processors and retailers, he stressed.

"This unbalanced structure leaves most producers in a very vulnerable position and is not in the long-term interests of consumers," added Mr Dunn.

It was why there was a need for legislation within the CAP, he urged. "A robust and coherent CAP would ensure fair livelihoods for working farmers while providing a framework for food and environmental security coupled with a strong regulatory environment which ensures fairness for all in the food supply chain," he added.