Alyn Hails Mandatory Contracts For Milk Producers

27 June 2011
Alyn Smith MEP, Scottish full member of the European Parliament's powerful Agriculture and Rural Development Committee, has hailed today's vote on the Nicholson Report on contractual relations in the milk sector as a major boost for Scotland's milk producers in the face of concentrated buying power and an unfair distribution of added value along the supply chain.

The committee voted overwhelmingly in favour of Alyn's amendment calling for mandatory written contracts across the sector across the EU, and supported greater transparency and information requirements in the milk market, such as volumes delivered and prices paid, and empowered inter-branch organisations and producer organisations to help raise awareness of milk products, develop risk management practices, and in certain limited cases to manage supply of PDO/PGI milk products.

Alyn said:

"It's been clear for some time that there are deep structural problems in the milk market thanks to an inadequate form of deregulation that left dairy farmers without adequate bargaining power and without even the security of knowing what price they would receive for their delivery.

"When producers are consistently receiving a price lower than their production costs there's clearly something wrong, and while mandatory contracts are not a silver bullet they will at least be a start towards the rebalancing we need to see.

"That's why I'm delighted that my colleagues took up my proposal for mandatory written contracts. NFUS have done a lot of good work with their campaign for a new milk price formula, and I think with this vote we've provided them with the necessary European legislative backing, now that contracts will be compulsory.

"I'm disappointed but not surprised by the failure of the UK Government to back these demands. Once again, they have shown an inability to comprehend the fact that the free market simply is not working, and have proven all too reticent to take the root-and-branch action required to help those that grow and raise our food. Scottish farmers need action, not timidity, and that's what they got today.

"Now rapporteur Jim Nicholson will negotiate with Council, and I'm hopeful that Parliament will stick to its guns and not back down on the most important issues."

Alyn's successful amendment reads:

"Every delivery of raw milk by a farmer to a processor of raw milk must be covered by a written contract between the parties."

These contracts shall be concluded in advance of the delivery, be calculated using a formula set out in the contract, and include renegotiation and termination clauses. Such contracts shall not apply to deliveries within co-operative groups. The new rules include provisions allowing farmers to unite in producer groups to bargain collectively with processors and retailers in order to achieve a better price. The volume of raw milk covered by such negotiations can reach 40% of the production of a Member State.