Commission to propose new rules for dairy sector

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In the aftermath of a major price crisis on the EU dairy sector, the European Commission is planning to present a package of legislative measures to increase dairy producers' bargaining power in the food supply chain. The proposed measures may set a precedent for similar action in other agricultural sectors. 

On the basis of work carried out by a high-level group examining the long term future of the EU dairy sector, "we will have fairly concrete elements upon which to base a legislative package" of regulatory measures, Dacian Ciolo?, the EU commissioner for agriculture and rural development, said yesterday (29 March).

Speaking to the press after a meeting of EU-27 farm ministers in Brussels, he said the dairy high-level group will present its report in June, after which the EU executive would be in a position to present a package of legislative measures by the end of the year.

Ciolo? said the package will address issues such as the negotiating power of dairy producers and review market mechanisms to make them more efficient.

"We will also look at the whole issue of the contract system between the various players in the supply chain, as well as transparency," he added.

French Farm Minister Bruno Le Maire believes contractualisation at EU level between producers of agricultural commodities and industry offers a "way forward" for the agricultural sector as a whole, rather than milk alone (EURACTIV 08/09/09).

Commissioner Ciolo? said another area of work for the EU executive as far as the functioning of the food supply chain is concerned relates to competition law. His colleague in charge of industry, Antonio Tajani, will work on that and organise a forum on the food supply chain to steer the discussion on sector-specific measures and proposals, he said.

Functioning of the food supply chain

After their first exchange of views at a meeting in February, EU farm ministers agreed on four priorities to improve the functioning of the food supply chain in Europe (EURACTIV 24/02/10).

Spanish Agriculture Minister Elena Espinosa said ministers "want to promote sustainable market relations" between the parties involved in the food supply chain and promote increased transparency in the food supply chain to improve competitiveness and tackle price instability.

Ministers also agreed to improve "the integration and competitiveness of the agro and food supply chain" across the EU 27 and to eliminate obstacles fragmenting the single market, she added.

EU farm lobby Copa-Cogeca welcomed the Council's decision to improve the functioning of the food supply chain, agreeing that "cooperatives and possibly other producer organisations should be strengthened and whenever appropriate their size enlarged" to give them "a strong, economically viable position in the food chain".

Cogeca President Paolo Bruni stressed that "farmers' market position in the food chain must be strengthened significantly. In the case of bread, for example, the retail price can currently be as much as 30 times the farm gate price, with farmers receiving in general around 8% of the final retail price".

With food prices hitting exceptional highs in 2008, the European Commission decided in May that year to open an investigation into the causes of such sharp increases. The EU executive decided to better monitor developments in agricultural commodity prices, analyse the impact of speculation on prices and investigate the functioning of the food supply chain.

After a year-long inquiry into the food supply chain, a Commission report published in October 2009 concluded that there were "significant imbalances" in contractual relations between actors in the food supply chain. Tensions stem from differences in bargaining power, which may lead to unfair trading practices, it said (EURACTIV 29/10/09).

EU-27 farm ministers agreed in January to push for measures that would ensure all actors in the food supply chain, and particularly farmers, receive fair compensation for their work (EURACTIV 19/01/10).

  • Agriculture and Fisheries Council: Conclusions (29 March 2010)

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