Colin Clark
Colin Clark is a partner at Pagan Osborne and heads its agriculture and estates team. He is an accredited specialist in agricultural law. Here he comments on the growing debate around market manipulation to control food costs.
"There has been a lot of comment in the press about manipulation of the markets and how that might be used to control food costs.
In a free market economy such as ours it is a very difficult balancing act between allowing enterprise and restricting trade through regulation. In either case you end up with manipulation which usually means someone losing out.
"In theory, in a genuinely free market, prices should find their true level. In practice, however, the market is manipulated by Governments through subsidies or commodities taxation and by businesses which have a monopoly or a big enough share to influence the price up or down.
"In the UK our farmers benefit from subsidies on the one hand but on the other, they are at the end of the supply chain where they are not buying or selling into a truly free market.
"Was the dramatic increase in the cost of fuel oil during the recent cold weather caused by rising oil prices or profiteering? The same question is often asked when fertilizer suppliers increase their prices by similar amounts at the same time. The price paid for milk is below the cost of production for many producers causing a lot of dairy farmers to give up production. Are milk prices being kept artificially low?
"When wheat prices go up the cost of bread swiftly follows but doesn’t seem to come down when wheat prices fall. When there is a shortage of pig or poultry meat instead of the farmer benefitting, the expected increase in price doesn’t always materialize, often because imports which may not always meet the same rigorous standards our farmers have to comply with are rapidly brought in.
"The conundrum is how to deal with real as opposed to perceived market manipulation. There is no doubt that Government has a role to ensure that suppliers and consumers are given a fair deal but they must be prepared to act quickly to prevent long term damage. But farmers also have a role.
"This may be by saying "no" when offered a price which is too low. Or by increased cooperation between farmers through a marketing group or representative body which has strength in numbers to fight back.
"A solution must be found as being at the mercy of markets as a price taker instead of price maker is not a comfortable situation to be in and is not sustainable in the long term when trying to build a profitable and vibrant industry for the future"