EU advised to table rules for dairy contracts


After eight months of brainstorming, an EU expert group has drummed up seven recommendations to stabilise the dairy market and ensure a fair income for producers.

The group proposed measures to enhance the use of written contracts in the dairy supply chain and recommended increasing the collective bargaining power of dairy producers (EURACTIV 19/01/10).

Based on the recommendations put forward in the final report by the High Level Group on Milk, adopted yesterday (15 June), the European Commission is planning to present a package of legislative measures by the end of the year.

The proposed measures may set a precedent for similar action in other agricultural sectors (EURACTIV 08/09/09).

'Contractualisation' of dairy sector: A precedent for other farm commodities?

The experts call on the Commission to draft either guidelines or a legislative proposal covering contractual relations between milk producers and milk processors.

Formal written contracts regarding the price, volume and timing of deliveries of raw milk and the duration of contracts must be further developed, they say.

Member states could make use of these contracts compulsory, the group stresses.

Such 'contractualisation' at EU level between producers of agricultural commodities and industry is not currently possible.

As for the collective bargaining power of milk producers, the expert group invites the Commission to consider a legislative proposal to allow dairy farmer producer organisations to jointly negotiate their contract terms, including price. Whether permanent or temporary, such provisions should be subject to review, the report notes.

Other recommendations relate to the possible role of "interbranch organisations" in the dairy sector, increasing transparency in the supply chain with monitoring via the European Food Price Monitoring Tool, marketing standards and origin labelling of dairy products.

Pekka Pesonen, secretary-general of EU farmers' lobby Copa-Cogeca, said the report "answers some of the demands put forward by Copa-Cogeca to the High Level Group, especially maintenance of current measures to manage the market".

He urged the EU executive to turn the recommendations into concrete proposals rapidly "so that dairy farmers can be secured a future and employment can be maintained in the rural areas of the EU".

The European Dairy Association (EDA), which represents the interests of EU dairy processors, said it welcomed the group's recommendations, "in particular with regard to market management and innovation".

However, it regretted that the experts had "not undertaken a broader reflection on the competitiveness of the whole sector and further explored instruments to tackle new challenges, such as extreme price volatility".

In the aftermath of a major price crisis on the EU dairy sector, the Commission established a High Level Expert Group on Milk (HLG) in October 2009 to consider regulatory issues which might contribute to stabilising the market and producers' income and enhance transparency on the market.

The group was also established to find ways to help producers adapt to the expiry of EU milk quotas in 1 April 2015, an outcome of the 2008 CAP Health Check.

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