The author of the letter have raised a pertinent question regarding retail price of milk and the need for the government to regulate the milk prices. The author has presented several data points and arguments to strengthen the case. However, there seems to have some inherent weakness in the arguments of the author. I will discuss some questions which needs to answered before reaching any conclusion regarding any government action over the matter.
As per arguments of the author, the dairy farms in the country had steadily grown in past 10 years and are 25% more than number of dairy farms country had 10 years ago. Although, the author is presenting the national numbers. It doesn't reflect the regional distribution of dairy farms and respective growth rate. It could be possible that, dairy farms in Batavia had actually reduced in recent past due to various reasons. Hence, the local market prices of milk are high. We must examine regional milk production data and associated milk prices before reaching out to government for any corrective action demand.
Author mentions a very apt data point that retail milk prices have doubled, from $1. 50 to $3. 00 over the past 10 years. From outset it looks a substantial figure, which could dwindle the household budgets. On the contrary, we should also factor in the regular annual food inflation figures. If we apply mathematical calculation we will find that amounts will double if there is inflation of 8% year on year. The inflation figure is little on the higher side. However, the Batavia region could be booming with development and hence inflation is high because residents have more disposable income. To conclude my present argument, we should check economic indicators such as inflation, growth rate and household income before conclusively comment that this is huge increase and regulation is required.
My final argument is about the dairy farmer, who sets up the farm, rears cattle and engage in business of milk production and selling. The author has conveniently ignored the potential issues which could be at the level of dairy farmer. We must check about the past 10 year trend of feed and fodder price, veterinary services cost, labor cost, utilities cost and other associated costs which are essential to run a dairy business. Any adverse impact on the input cost, to maintain a workable profit, farmer could pass on the increased cost to the end customer. Hence resulting in increased prices of milk in retail market.
In my view, we must look at the macro economic factors, local production conditions as well as the distribution of milk production and dairy farms at the country level as well as regional level to deep dive and find out the root cause of the problem or even there is a problem which needs addressing.
The
author
of the letter have raised a pertinent question regarding retail
price
of
milk
and the need for the
government
to regulate the
milk
prices
. The
author
has presented several data points and
arguments
to strengthen the case.
However
, there seems to have
some
inherent weakness in the
arguments
of the
author
. I will discuss
some
questions which needs to answered
before
reaching any conclusion regarding any
government
action over the matter.
As per
arguments
of the
author
, the
dairy
farms
in the country had
steadily
grown in
past
10 years and are 25% more than number of
dairy
farms
country had 10 years ago.
Although
, the
author
is presenting the national numbers. It doesn't reflect the regional distribution of
dairy
farms
and respective growth rate. It could be possible that,
dairy
farms
in
Batavia
had actually
reduced
in recent
past
due to various reasons.
Hence
, the local market
prices
of
milk
are high. We
must
examine regional
milk
production
data and associated
milk
prices
before
reaching out to
government
for any corrective action demand.
Author mentions a
very
apt data point that retail
milk
prices
have doubled, from $1. 50 to $3. 00 over the
past
10 years. From
outset it
looks a substantial figure, which could dwindle the household budgets.
On the contrary
, we should
also
factor in the regular annual food
inflation
figures. If we apply mathematical calculation we will find that amounts will double if there is
inflation
of 8%
year
on
year
. The
inflation
figure is
little
on the higher side.
However
, the
Batavia
region could be booming with development and
hence
inflation
is high
because
residents have more disposable income.
To conclude
my present
argument
, we should
check
economic indicators such as
inflation
, growth rate and household income
before
conclusively
comment that this is huge increase and regulation
is required
.
My final
argument
is about the
dairy
farmer, who sets up the
farm
, rears cattle and engage in business of
milk
production
and selling. The
author
has
conveniently
ignored
the potential issues which could be at the level of
dairy
farmer. We
must
check
about the
past
10
year
trend
of feed and fodder
price
, veterinary services
cost
, labor
cost
, utilities
cost
and other associated
costs
which are essential to run a
dairy
business. Any adverse impact on the input
cost
, to maintain a
workable
profit, farmer could pass on the increased
cost
to the
end
customer.
Hence
resulting in increased
prices
of
milk
in retail market.
In my view, we
must
look at the macro economic factors, local
production
conditions
as well
as the distribution of
milk
production
and
dairy
farms
at the country level
as well
as regional level to deep dive and find out the root cause of the problem or even there is a problem which needs addressing.