Richard Hosking, of Lower Bowcombe Farm, Ugbrough, Ivybridge, writes: The retail milk price has for many fallen again to below the cost of production, despite voluntary agreements with retailers. Anyone who studied basic Keynesian supply and demand theory will not be surprised. The production side of the dairy industry is as close to the 'perfect market' model of an unlimited number of small producers producing an homogenous product as we get in the real world. The demand side is largely in the hands of a small number of wholesalers and retailers, and this oligopoly power can dictate price. Okay, every cloud has a ­silver lining. The shelf price of milk is in places less than 25p per pint, which is great for ­consumers. However, as the Keynesian model shows, when this happens producers go out of business and supply reduces until scarcity forces an increase in price. How many of you are aware that home production of food in the UK is down from around 85 per cent in 1986 to around 60 per cent today? The disguised problem is that it takes two-plus years to breed a replacement dairy cow, and increasing supply of milk when the price rises is very slow – termed 'inelastic'. The very evident problem is that dairy herds are becoming larger; a planning application was made for an 8,000-cow herd in the UK, and there are 24,000-cow herds elsewhere in the world. Cows in such large units often remain housed 24/7; the pursuit of increased milk production has narrowed the gene pool dangerously; and the milkman may be close to extinction. Who replaces that friendly daily visit for the elderly in society? This is all a far reach from the mixed farm on which I was brought up with just 40 cows, all known by name. I do not believe I am alone in wishing that smaller, field-grazing herds were more profitable. We once organised our dairy sector much more sustainably. The Government effectively bought the whole product of Dairy Herd UK at an annually negotiated price that covered production cost and provided adequate profit to ensure the future supply of the desired quantity of milk. Milk was sold to wholesalers at a price that enabled doorstep delivery. This had benefits for self-sufficiency, ie food security, which reduced the deficit, improved the balance of payments and delivered a pint of milk to the doorstep of the consumer every morning. The EU is anti-monopoly, advocating instead that farmers form cooperatives of sufficient size to oblige wholesalers and retailers to offer a reasonable price. Our membership of the EEC has now passed its 40th birthday. There is no trace of an effective cooperative having secured a reasonable price and farmers are still price-takers. The reality is that the Milk Marketing Board was a ­monopoly that acted in the national interest, not just the interest of corporate profits. I sincerely hope that national marketing boards are on David Cameron's renegotiation list for 2017.