Naslovna Aktuelno MEPs and member states reach new agreement over milk contracts
MEPs and member states reach new agreement over milk contracts
utorak, 13 decembar 2011 00:00

Issue: AE2493
EU member states are to continue to decide whether or not to impose compulsory contracts between milk producers and industry next year, following an agreement provisionally reached between European Parliament and Council representatives on the future of the dairy sector.

Conciliation talks between the two institutions had previously stumbled over the minimum duration of supply contracts and whether or not they should be compulsory.

This week's deal - reached following a series of conciliation talks - would see member states largely retain the right to decide to what extent milk contracts are regulated, as part of watered-down contract rules compared to those demanded by agri committee MEPs earlier this year (see AE2470, 01.07.11, page 6).

However, farmers may from next year also be represented by their producer organisation during negotiations over the milk price, in a move aimed at boosting their bargaining power in the food chain.

"These tools will replace instruments that have lost their effectiveness and did not prevent the 2009 dairy crisis," EU Farm Commissioner Dacian Ciolos said last week, referring to the collapse in raw milk prices that had sparked proposals for dairy sector reform last December. Dairy farmers and processors have since lost an estimated 10 billion, while profits for the food chain as a whole have remained stable.

Under the deal, compulsory contracts will be required to state the raw milk price that will be paid to farmers, with any disagreement opening up all aspects of the contract up for negotiation - as both parties agreed as a compromise over the past week (see AE2491, 29.11.11, page 7). Farmers have until now supplied milk without knowing exactly what return they will get when it is sold.

However, the agreement falls short of setting a common minimum timeframe for the contracts, with MEPs merely "strongly recommending" that a six-month minimum be respected.

Parliament rapporteur James Nicholson nonetheless claimed that the "central aim" of the package - that of allowing producers to strengthen their position in the dairy supply chain - had been achieved.

Under provisions understood to have been demanded by Parliamentarians in exchange for the concession over setting a minimum time limit, milk supplied to make certain cheese types covered by the EU's speciality food labels must be covered by contracts. At least two thirds of farmers delivering at least 66% of the milk destined for the production of such quality cheeses must agree that supply will be controlled before any limits on production are imposed.

The European Commission will also issue reports analysing whether farmers from Least Favoured Areas (LFAs) are benefitting from the arrangement in July 2014 and at the end of 2018.

The volume of raw milk covered by negotiations between producers' organisation and processors or collectors may not exceed 3.5% of total EU output, so as not to distort competition. It must also be less than either 33% of overall national production or 45% in states where total production amounts to less than 500 000 tonnes - as called for by MEPs.

Mixed reaction

EU farming union Copa-Cogeca welcomed the deal as a step in the right direction. "The agreement responds to our calls to strengthen farmers positioning in the food chain as they currently only get a fraction of the price," its secretary general, Pekka Pesonen, claimed.

But the English National Farmers' Union lamented a "golden opportunity" being lost by the bloc in strengthening farmers' bargaining power when milk quotas end in 2015.

"With the exception of new powers for producer organisations, [this week's] agreement does little more than maintain the status quo for our farmers," argued chief dairy advisor Rob Newbery, while noting a voluntary code of conduct between farmers, processors and retailers could yet be drawn up for the sector in the UK.

And small farmers' movement Via Campesina warned that without EU tools for controlling the quantity of milk being produced, farmers' bargaining power would not be reinforced.

"Without a system for controlling production that controls supply against demand, farmers will continue to face extreme price volatility putting more and more out of business," the group said in a statement.

Co-operatives should also have been included within contract regulation as that is where the lowest milk prices could be seen during the last crisis, it added, calling on MEPs to turn their backs on the compromise deal.

While the agreement is still subject to a plenary vote at the European Parliament expected in February it will now likely be approved by both MEPs and then member states at the following Farm Council meeting.

The first milk contracts are then set to enter into force six months later, despite a handful of member states understood to be pushing for their introduction at the end of 2012.



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