DAVID HANDLEY WESTERN DAILY PRESS COLUMN
If you read the story of the great banking collapse of 10 years ago you will be amazed at the degree of stupidity exhibited by those who were handling billions of pounds of unfortunate investors’ money.
How entire banking empires were built on foundations of sand and only remained upright as long as hundreds of thousands of people kept up their mortgage payments. And how, when it gradually became clear that those people had been mis-sold mortgages they couldn’t afford and they began to default that the entire pyramid just collapsed.
I was put in mind of this catastrophe recently when I read of the hundreds and hundreds of dairy cows being sent for slaughter as a result of the drought and the consequent shortage of fodder.
Farmers who haven’t been able to afford to pay the inflated prices a shortened market is demanding have been refused extended credit by their bank managers and told to sell the herds instead.
I have to declare bluntly that I have little sympathy for them. Because they have brought this situation on themselves through a combination of greed and stubbornness. Greed that has driven them to chase higher and higher profits by keeping more and more cows on acreages that can only support the numbers as long as everything that God sends arrives on schedule – including rainfall.
Once that facility was withdrawn this year hundreds of farmers found themselves (in financial terms) dangerously over-exposed: trapped between spiralling costs and inadequate returns from a market now almost totally controlled by supermarkets. And the only logical step has been – as the banks have pointed out – to get rid of the source of the problem: the excess cows.
Now, it may seem bizarre to anyone outside the industry that dairy farmers are divesting themselves of their only real assets. But anyone who has been observing the dairy sector for the last 30 years will conclude this was the inevitable outcome.
It’s quite a remarkable story. We had an army of dairy farmers who collectively controlled the supply of a commodity which the nation cannot do without, either in its raw form or (to borrow another banking term) derivatives such as butter and cheese. As sole suppliers of this commodity the farmers thus held all the aces.
And had the sector not been riven by greed, jealously and obstinacy they would have found ways of coming together to form a single selling co-operative (perfectly permissible under EU law as the examples in other countries demonstrate) to retain control over the market, and fix prices to give themselves an adequate return without having to work both cows and land harder and harder and leaving themselves dangerously exposed to the unpredictable whims of the climate.
Instead they allowed their ranks to become fragmented and power to slip through their hands and be ceded to the supermarkets with the result that most have ended up in conditions not unlike slavery, only worse. Slaves, after all, got paid nothing: many dairy farmers are now having to pay out to stay in business.
Meanwhile Minette Batters – who has not yet, I see, perfected the technique of walking on water that was expected of her – can do no more than parade upand down outside Defra wringing her hands and complaining that Michael Gove’s promises to do ‘whatever it takes’ to help farmers out of their crisis have not been delivered on.
Wild politicians’ promises like that, Minette, are on a par with ‘the cheque’s in the post’. Welcome (finally) to the real world.
David Handley is Chairman of Farmers For Action