Milk is not cheaper than water
From booze to petrol, water is the scaremongerers’ comparison of choice.
It’s shocking, just shocking. On Monday, the president of the National Farmers Union (NFU), Meurig Raymond, told BBC Radio 4’s Today that ‘milk… is now cheaper than water’. It was a claim widely repeated in reports discussing the plight of the UK dairy industry. What could be more alarming than an industry receiving less for its product than they would get for the stuff falling from the skies and coming out of our taps?
Of course, the claim is nonsense – at least by any fair comparison. Does Raymond mean that the price obtained for the milk produced on a large scale by his members – as low as 20 pence per litre – is cheaper than the water supplied to the farms? Clearly not. But maybe he has a point about the price of milk in shops. Is it cheaper than the bottled water on the adjacent shelves? And is this having a knock-on effect on the price received by producers?
It is true that in recent months, there has been a supermarket price war going on. And the weapons in this war are those products that consumers are most likely to know the regular price of – and everyone knows the price of milk (except, perhaps, some out-of-touch politicians). Many of the big supermarkets have been selling a four-pint container of milk for just £1. The discount supermarkets have gone even lower, selling four pints for 89 pence. (Asda has just dropped its price to match the discounters.) Given that a single pint costs somewhere between 45 and 50 pence in a supermarket, that’s a very good price.
But milk is still more expensive than water, even spring water. In my local branch of Tesco Express, for example, that four-pint (2.27 litre) container of own-brand milk is £1 – or 44 pence per litre. Across the aisle can be found a two-litre bottle of own-brand spring water, which costs 47 pence – or 23.5 pence per litre. In other words, the water is still much cheaper. Of course, it’s possible to find bottled water that is more expensive in the same shop. One fancy bottle, no doubt declaring its purity, chicness and exclusivity, was on sale for £3 per litre. But comparing the price of own-brand, loss-leader milk with overpriced, overhyped branded water marketed to complete mugs is hardly a sensible exercise.
This phrase, ‘cheaper than water’, isn’t the sole preserve of outraged dairy farmers, however. It crops up in plenty of other places, too, and it is generally employed by somebody with an axe to grind, or a hack looking for an easy scare story.
For example, during last summer’s football World Cup, Channel 4’s Dispatches (a show which proves that journalism can be cheaper than water) released figures apparently showing that ‘beer is cheaper than water‘. Well, it’s true. Supermarkets were selling multipacks of brand-name beers for a price equivalent to as little as 69 pence per pint. But Perrier mineral water – a product at least trying to maintain some pretence to exclusivity – was selling for the equivalent of 73 pence per pint. Which only goes to prove that a loss-leading, temporary special offer may be cheaper than a product trying to pretend it is a luxury by charging a ludicrous mark-up. Cue anti-alcohol campaigner Katherine Brown to declare: ‘The government has completely reneged on its commitment to tackle pocket money-priced alcohol, which is fuelling rates of disease and disorder in the UK.’
In Australia in 2009, hard-pressed grape growers were moaning that ‘wine is now cheaper than water‘. In this case, there was a glut of home-produced wine exacerbated by a strong Australian dollar, which meant exporting wine had got harder. At the very bottom-end of the market, ‘cleanskins’ (unbranded wine) was selling for $1.99 a bottle – slightly less than for brand-name water. Unfortunately, what it meant was that the boom times for Aussie wine had been scuppered by overproduction and, sadly, many bankrupted wineries were left drowning their sorrows and flogging off their product to anyone who would buy it. Most wine was still considerably more expensive than water.
And what about petrol? In the US in 2004, National Geographic declared: ‘In the United States, where gasoline taxes average 43 cents a gallon (instead of dollars, as in Europe and Japan), a gallon of gasoline can be cheaper than a bottle of water – making it too cheap for most people to bother conserving.’ This low price meant that ‘the US remains the king of consumers, slurping up a quarter of the world’s oil’. And for the eco-friendly scribes at National Geographic, this was too much. There would be a reckoning. ‘People should be doing something now to reduce oil dependence and not waiting for Mother Nature to slap them in the face’, a Princeton consultant warned. Never mind that if you bought water like you buy petrol – by the tankful – it would be much, much cheaper. The shocking, zombie statistic remains.
Take away the scaremongering and some more prosaic truths emerge. British dairy farmers need to raise their productivity and cut their costs, or they should get out of what is a tough and unrewarding industry where economies of scale are becoming ever more important. Britain does not have a drinking problem (a small minority of individuals apart), and supermarkets are perfectly entitled to try to get football-loving boozers into their stores with promotions. Petrol in Europe and Japan is ludicrously over-taxed and those of us on this side of the pond would love to enjoy US gas prices. Lobby groups and campaigners, ably assisted by lazy or advocacy journalism, use scare stats to try to shock us into their way of thinking.
We should carry on buying the milk, beer and petrol – just not the ‘cheaper than water’ myth.
Rob Lyons is a columnist for spiked. Follow him on Twitter: @RobSpiked