Dairy Disappointment As Milk Package Goes Sour

07 December 2011
Alyn Smith MEP, Scottish full member on the European Parliament's Agriculture and Rural Development Committee, has expressed his disappointment with the final legislative agreement for new rules for the milk sector as a missed opportunity.

The package waters down significantly the strong position initially agreed to by the European Parliament.  Crucially, instead of mandatory written contracts for all milk farmers in the EU, secured through an amendment tabled by Alyn in the Agriculture Committee, it will be up to the Member States to decide if written contracts will be compulsory - an option the UK Government probably will not take.

Producer organisations will be able to use their bargaining power to negotiate better raw milk prices for the farmers they represent, but face stronger limits on their potential size and bargaining power than in the Parliament text.  Rules on transparency of data on production and monitoring the progress of prices and margins have also been significantly weakened.  Supply management options will be available - but only for the producers of European quality mark cheese producers, concentrated in only a few Member States.

Alyn said:

"This leaves a sour taste, and is simply not the result for our dairy producers that we were hoping for.  It also does not bode well for the Parliament's shiny new co-decision power in agriculture.  On every issue of importance, the Parliament has simply given way before the negative blocking power of the Council.  As a result, many of the important gains we made in the vote in Agriculture Committee have simply been wiped out.

"I'm particularly disappointed about the lack of mandatory written contracts.  As a commercial lawyer by training, I find it astonishing that this does not already exist - it is the very basis of fair dealing between commercial partners, and it is disgraceful that many farmers do not even know what price they will get when they deliver their milk.  I appreciate that the new rules do now mean that a contract will have to state the price, but the fact that the contract itself will not be mandatory in many countries completely defeats the purpose.  This will only mean the continuation of unfair commercial practises.

"Similarly, the bargaining power of producer organisations has been weakened in the final text.  Typically, the Council and Commission scream monopoly when small producers try to get together to win a price sufficient to cover their production costs, but do nothing about the immense middleman power of the retailers and processors.  Indeed, for some countries 33% will not make a difference, as they already have POs covering more of the market!

"The Council have also severely restricted the information about production levels, quality, prices and margins which must be disclosed. Full transparency is absolutely fundamental to an effectively working market, so again the final deal simply falls short of what is needed."