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Friday, 3 July 2015

Milk

I went to the fridge today, and found a pint of milk with a lilac cap. It was "1% fat" milk.

There's skimmed milk (red top, 0.2% fat), semi-skimmed milk (green top, 1.7% fat), full-fat milk (blue top, 4% fat); in the US, they have a somewhat different system, but the idea is the same, there's various degrees of fat reduction.

I don't like black coffee, but I do like coffee with milk. However, as part of my attempt to reduce my weight, I generally use red top milk, although I'm not fanatical about it.

So why are there four types of milk? It has to be that there's demand for each of them. Or maybe there isn't.

The farmers are constantly bleating that bottled water costs more than milk, as if that were some sort of argument. All that means is that people are willing to pay a premium for branded water. Is milk better for you than water? Are farmers entitled to keep cows for milking, and entitled to whatever price will make that profitable?

I'm a really good Fortran programmer. It's a pretty much obsolete skill, even though if you can't do it in Fortran, it isn't worth doing. When I found Turbo Pascal, I ditched Fortran, and when I found Perl, I ditched Pascal.

In the USA, the supply of milk is greater than the demand, or to put it another way, the price of milk is being kept artificially high. So they're pouring milk away, because what else could you do with it?

Well, you could store it for the future - except that milk doesn't store very well. You could give it away to poor people - except that this actually makes the situation worse, because you might increase the demand a bit, but you'll also decrease the *paid* demand a bit, and the revenues to the farmer are only going to go down. You could process it into cheese, except that they already know that you can make cheese from milk, and if they aren't doing that, then it's probably because it isn't economic, and because the cheese-making capacity is fully in use.

There's too much milk world wide. It's really as simple as that. In such a situation, the price of bulk milk falls, some farmers decide that they should get out of milk production because it's not profitable to them, and supply falls. Supply and demand tend to get closer into balance.

But this takes time; you can't reduce (or increase) milk supply instantaneously. It takes time to change agricultural production, that's why you get the classical "hog cycle".

Meanwhile, what can farmers do when they can't sell their milk? All they can do, is pour it away. And in the longer run, change to producing something else.

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