Does The Milk Package Do Enough For EU Dairy Sector?

ANALYSIS - This week European MEPs and Council negotiators agreed on regulations aimed to boost dairy farmers' bargaining power, ensure fairer prices for raw milk and help prepare for the end of milk quotas in 2015.
calendar icon 9 December 2011
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Dacian Ciolos Commissioner for Agriculture said that the dairy package will encourage producers to negotiate contracts on price and quality. The new rules will allow producers' organisations to negotiate raw milk prices for the farmers they represent.

Member States may continue to decide whether or not to impose contracts covering milk delivery from farmers to collectors or processors for their territory.

However, where Member States do choose to impose compulsory contracts for milk supplies, these contracts must state the price. Member States may also stipulate a minimum duration for these contracts of at least six months.

Whilst Dairy UK supports this decision, saying that voluntary contracts work well in the UK, Romuald Schaber, President of the European Milk Board has said: “If contracts between producers and the dairy are not obligatory throughout the EU, and instead every country decides on its own whether to introduce them on a compulsory basis or not, then it is simply impossible to improve the European producers’ position in the market.”

The National Farmers' Union (NFU) in the UK has also said that the milk package falls short in strengthening dairy contracts. Chief dairy advisor Rob Newbery said that the package will not safeguard the long-term future of the dairy sector.

Italy has welcomed the proposals, particularly the option of introducing a supply management system to improve the market for cheeses registered under a protected designation of origin.

Criticising this proposal Mr Schaber said: "Supply management must apply to the entire milk market, otherwise everyone, the producers in particular, will be careering towards the next crisis."

Henri Brichart, Chairman of Copa-Cogeca’s Milk Working Party insisted that the deal will give farmers and processors more certainty by allowing them to know, in advance, the price to be paid for the raw milk delivered and the quantity to be delivered.

But he warned that this dairy package is not sufficient in order to meet all the challenges. The tools to manage the EU markets, such as intervention and private storage, remain the most effective tools to help deal with crises on the EU market.

The results of the negotiations will be presented to the Agriculture Committee MEPs on 20 December. Parliament's plenary vote is foreseen for February 2012.

Undoubtedly the milk package will go some way towards improving producers bargaining power - but will it do enough to stabilise the volatile market?

EU farmers lost more than €10 billion during the last milk market crisis.

Charlotte Johnston, Editor

Charlotte Johnston - Editor

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