Protest by 100 Dairies

ParmigianoReggianoYesterday, I happened to be browsing through the “Gazzetta di Reggio” as a result of which I learned about the ongoing protest by 100 Dairies who’ve been put on the ropes by the current economic crisis.

The Dairies in Reggio Emilia, also called “Caselli,” produce Parmigiano Reggiano and represent a significant part of the region’s history. Twenty years ago there were 1800, but today there are only around 400.
They are protesting because the sale price of Parmigiano Reggiano doesn’t give them adequate or realistic profit margins. Indeed, it appears that the cost of producing it is higher than the price they get when selling it.

On the understanding that this isn’t my field, I put the following idea up for consideration.
The ‘King of Cheeses’ is mainly sold on Supermarket shelves, the sellers are therefore only some 400 Dairies, whilst the buyers are large scale distributors who represent only a handful of buyers.

The technical term for this is ‘Oligopsony’ (Wikipedia: “A form of market in which the supply is spread over an indefinite number of suppliers, but demand is limited to a small number of operators “).
Many are selling, but few are buying; the law of Supply and Demand shows there is an inverse relationship between prices and the quantities being ordered, which explains the inadequate prices paid for Parmigiano Reggiano.

I don’t know how to completely resolve the problem, but it seems to me that there are a few steps that could be considered:

- Continue the process of bringing Dairies together so they have more of a voice in negotiations with the big distributors;
- Support dis-intermediation between the producers and consumers, which might bring them in closer and more direct contact, without a long chain of intermediaries. For example, by using e-commerce.

To see Stracchino selling at a higher price than Parmigiano Reggiano is heartbreaking.



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