Redesigning Animal Agriculture

208 D.L. Swain and M. Gill
thus created a market which provided the
catalyst for enhanced productivity.
By the early 1980s the oversupply of
food started to build up in intervention
stores, creating the so-called ‘milk lakes’
and ‘butter mountains’. The interventionist
policy had successfully increased production
through agricultural intensification.
Increased mechanisation, improved genetics
and more widespread use of agrochemicals
underpinned the economic model. However,
in the mid-1980s it became apparent that the
oversupply of dairy products was becoming
a problem. Subsidized food that entered the
global market place created trade tensions.
Within the EU there was increasing concern
that farmers were receiving public money
to produce food that was no longer needed.
Within the UK to counteract these tensions,
policies were adopted to restrict output, and
in 1984 milk quotas were set and economic
penalties imposed for overproduction
(Colman, 2000). In the UK, farmers who had
successfully streamlined their businesses
for increased production now had to find
new ways of running profitable businesses.
The introduction of quotas created
a new market scenario with a shift from
production maximization to either maximize
efficiency or add value. The relatively
rapid shift in emphasis created significant
economic challenges particularly for those
farmers that operated an output-driven economic
model with large capital investment
which enabled them to maximize production.
High capital overheads cannot quickly
be reduced. Although the new economic
framework focused attention on inputs there
was still a drive to increase output per unit
area or per unit livestock. Quotas encouraged
dairy farmers to explore their business
options. At the farm level some producers
tried to expand production to increase business
efficiency. However, there were a number
of dairy farmers who decided to leave
the industry and others that added value
through niche markets, including processing
and organic production.
The UK dairy industry has seen a continued
cost price squeeze with falling milk
prices and increasing costs of production
(Blackburn, 2006). Added to the economic
challenges there has been an increasing
burden of environmental and food safety
compliance. Agricultural intensification
policies within the EU created highly efficient
(in economic terms) dairy production
systems and succeeded in delivering cheap
milk through supermarkets. However,
mounting evidence indicates that this was
at the expense of the environment (Aarts
et al., 2000). Johnes (Chapter 11 this volume)
describes in detail the new challenge
posed by implementation of the EU Water
Framework Directive. Efficiency in the past
was judged in terms of maximizing marketable
outputs rather than minimizing wasteful
ones in dung and urine and it took some
time for the problems that these wastes created
to be recognized.
More recently there is a forecast that
falling milk supplies are leading to market
forces acting on the milk price; in certain
locations, processors and retailers are starting
to have to pay a premium to secure milk
supplies (Blackburn, 2006). History has
shown that dairy farmers in the EU have the
ability to respond to government policies
that change the economic drivers. The effectiveness
of economic liberalization coupled
with greater environmental intervention in
resolving environmental problems is yet
to be seen; however, the challenge to meet
the exigencies imposed by the EU Water
Framework Directive will provide an interesting
test.
Australian beef
In contrast to the policy-driven economic
framework of the UK dairy industry the
Australian beef industry has been largely
driven by global market forces. The neoliberal
framework explains industry structural
changes largely independently of
political intervention. Australia is one of
the world’s largest beef-exporting nations,
selling its products to a diversified market
including the USA, Asia and the EU
(Pritchard, 2006). Australian beef producers
have successfully managed to respond
to the global market-driven needs. The