New deal for dairy farmers a 'missed opportunity'
by Daniel Mason
07 December 2011
Dairy farmers will be able to negotiate fairer prices for their products under new rules set out by MEPs and member states in the Council of the European Union. But one farmers' union said the deal did little more than maintain the status quo and represents a missed opportunity to get a good deal across the single market.
The European Dairy Package is a response to the 2009 milk crisis, when a sharp fall in prices paid to producers led to a dispute with distributors and processors – provoking some farmers to dump milk in fields in protest. Based on European Commission proposals, it also designed to help farmers prepare for the liberalisation of the market and the end of milk quotas in 2015, part of the reform of the Commons Agricultural Policy.
Under the terms of the agreement, EU member states will have the option of imposing compulsory contracts for milk supplies, which must state the price in writing. They will also be able to enforce a minimum contract duration of at least six months to guarantee the farmer a price level for that time. Payment periods, as well as collection and delivery arrangements, will be written into the agreements. However, if a farmer rejects the length of a contract, all the other parts of the deal will put back on the negotiating table.
Meanwhile producer organisations will be able to bargain collectively for fairer prices for their members, levelling the playing field with powerful processors and distributors. To ensure fair competition, the volume of raw milk covered by the negotiations will not be allowed to exceed 3.5 per cent of total EU output, or a third of national production – rising to 45 per cent in countries that produce fewer than 500,000 tonnes.
The proposed agreement is due to be put to MEPs on the European Parliament's agriculture committee on December 20, before a full plenary vote in February next year – with the regulation set to take effect in 2012 and apply through to the end of 2020. Agriculture and rural development commissioner Dacian Ciolos said it was a "very significant step forward" and would prepare the sector for the "new economic context" by opening the market to modern management, more efficient bureaucracy and better organisation.
But the National Farmers Union in the United Kingdom said the package would do "little more than maintain the status quo". Although the NFU's chief advisor Rob Newberry welcomed the new powers for producer organisations – which he said had "exciting potential" – he expressed disappointment that European farmers will not be protected by common rules across the single market because the imposition of compulsory contracts will be voluntary on the part of member states. "We see this as a real missed opportunity," he said.
James Nicholson MEP, who led the talks on the package for the European Conservatives and Reformists, said the deal responded to the concerns of dairy farmers throughout the EU. "Dairy farmers get a rough deal in the supply chain and these plans will give them more clout when dealing with milk processors. Dairy farmers often feel they are fighting a David versus Goliath battle with many of the companies they supply to. These plans will re-tip the balance to ensure that farmers get a fair price for the milk that they produce." He said the next step would be to address the role of retailers in the market, an area not touched on by the latest agreement.
The centre-right European People's Party also acknowledged the agreement as a "breakthrough". Michel Dantin MEP said: "I am personally convinced that this agreement is a very positive step forward for our European milk producers. In the light of the upcoming CAP reform, it is a very important political signal that both the parliament and the council show strong will for collaboration in their function as co-legislators."
But Socialist and Democrat MEPs echoed the concerns of the NFU. Marc Tarabella said: "This agreement is good news for EU farmers but also for consumers, as strengthening the farmers' bargaining power also means higher quality production for everyone. We also strongly insisted on introducing a minimum duration of contracts. Farmers cannot rely on an income negotiated month by month. Unfortunately, however, this agreement has been hampered by the hostility of some EU countries that are set to opt-out of this reform and also didn't allow the establishment of a regulatory public authority to ensure greater transparency."
The European Dairy Package is a response to the 2009 milk crisis, when a sharp fall in prices paid to producers led to a dispute with distributors and processors – provoking some farmers to dump milk in fields in protest. Based on European Commission proposals, it also designed to help farmers prepare for the liberalisation of the market and the end of milk quotas in 2015, part of the reform of the Commons Agricultural Policy.
Under the terms of the agreement, EU member states will have the option of imposing compulsory contracts for milk supplies, which must state the price in writing. They will also be able to enforce a minimum contract duration of at least six months to guarantee the farmer a price level for that time. Payment periods, as well as collection and delivery arrangements, will be written into the agreements. However, if a farmer rejects the length of a contract, all the other parts of the deal will put back on the negotiating table.
Meanwhile producer organisations will be able to bargain collectively for fairer prices for their members, levelling the playing field with powerful processors and distributors. To ensure fair competition, the volume of raw milk covered by the negotiations will not be allowed to exceed 3.5 per cent of total EU output, or a third of national production – rising to 45 per cent in countries that produce fewer than 500,000 tonnes.
The proposed agreement is due to be put to MEPs on the European Parliament's agriculture committee on December 20, before a full plenary vote in February next year – with the regulation set to take effect in 2012 and apply through to the end of 2020. Agriculture and rural development commissioner Dacian Ciolos said it was a "very significant step forward" and would prepare the sector for the "new economic context" by opening the market to modern management, more efficient bureaucracy and better organisation.
But the National Farmers Union in the United Kingdom said the package would do "little more than maintain the status quo". Although the NFU's chief advisor Rob Newberry welcomed the new powers for producer organisations – which he said had "exciting potential" – he expressed disappointment that European farmers will not be protected by common rules across the single market because the imposition of compulsory contracts will be voluntary on the part of member states. "We see this as a real missed opportunity," he said.
James Nicholson MEP, who led the talks on the package for the European Conservatives and Reformists, said the deal responded to the concerns of dairy farmers throughout the EU. "Dairy farmers get a rough deal in the supply chain and these plans will give them more clout when dealing with milk processors. Dairy farmers often feel they are fighting a David versus Goliath battle with many of the companies they supply to. These plans will re-tip the balance to ensure that farmers get a fair price for the milk that they produce." He said the next step would be to address the role of retailers in the market, an area not touched on by the latest agreement.
The centre-right European People's Party also acknowledged the agreement as a "breakthrough". Michel Dantin MEP said: "I am personally convinced that this agreement is a very positive step forward for our European milk producers. In the light of the upcoming CAP reform, it is a very important political signal that both the parliament and the council show strong will for collaboration in their function as co-legislators."
But Socialist and Democrat MEPs echoed the concerns of the NFU. Marc Tarabella said: "This agreement is good news for EU farmers but also for consumers, as strengthening the farmers' bargaining power also means higher quality production for everyone. We also strongly insisted on introducing a minimum duration of contracts. Farmers cannot rely on an income negotiated month by month. Unfortunately, however, this agreement has been hampered by the hostility of some EU countries that are set to opt-out of this reform and also didn't allow the establishment of a regulatory public authority to ensure greater transparency."
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