Brussels, 10/12/2010 (Agence Europe) - European Commission proposals to help stabilise the dairy sector (see EUROPE 10274) have been generally well received by MEPs on the European Parliament (EP) agriculture committee. Several, however, called for measures to tackle price volatility and speculation, improvements on contracts and on the quantities in the raw milk supply contracts to be negotiated with dairies by producer organisations. Under the proposals, producer organisations are limited to 3.5% of the EU market and 33% of total national production to prevent any monopolies.
EP rapporteur on the milk package James Nicholson (ECR, UK) said that Agriculture Commissioner Dacian Cioloº was right in pointing out the problems (such as low prices) that the industry is facing. One of the main problems is price volatility and speculation in the markets. “Anything we can do to stabilise it is welcome”, he said.
Milk production depends on the market but it is also an issue for territorial balance, Michel Dantin (EPP, France) pointed out. Dairy farmers “probably have the most difficult job of all European farmers”. He welcomed the measures which seek to encourage producers to join together and become more organised, giving them greater clout in negotiations with processors and distributors. It remained to be seen, however, he said, if the figures proposed (3.5% of the European market and 33% of the national market) “will be enough to let them carry real weight”, when, at the other end of the chain, five or six major (distribution) groups are putting pressure on the processors. “Transparency should be enforced throughout the supply chain, including distribution”, he said. He was critical that the Commission had not done anything on innovation, though the matter was raised by the high-level group. Cooperatives need “a helping hand from the EU” on this to help them increase and diversify consumption of dairy products. “What we are doing in Europe will very probably be for nothing if there isn't real world governance on agricultural raw materials in the near future”, he warned. The global dairy market represents only 5% of production and, in 2009, an increase of barely one point was enough to destabilise the European market, Dantin pointed out.
“The worst enemy of long-term investment is extreme price volatility. Milk prices have fallen from 45 to 18 cents in the space of a little over a year”, said Belgian MEP Marc Tarabella on behalf of the S&D Group. Speculation on foodstuffs had to be reduced, or even ended (“We can always dream”), he said. The index-linked system is certainly useful, he noted, but the Swiss example “has demonstrated its limits”. In terms of transparency, he said that he hoped the EU would not content itself with monitoring deregulation. He also called for more to be done in terms of promotion. Consumption of milk and dairy products among children had tumbled “due to more appealing advertising of other kinds of goods, such as soft drinks”. More had to be done to promote the health benefits of dairy products and so to increase demand.
George Lyon (ALDE, UK) said that, in the UK, there was a “price war” on milk, with a 25% fall in supermarket prices and huge pressure being exerted by multinational companies. He wondered if the proposed measures would really increase producers' negotiating power with processors. Lyon suggested an ombudsman to ensure that contracts were respected and sharp practices avoided. He proposed, too, that national bodies be set up with the power to intervene in cases where negotiated terms are breached.
Martin Häusling (Greens/EFA, Germany) opined that the proposed regulation was a small step for milk producers. He felt that the proposed limits on the size of producer organisations (no more than 3.5% of EU output or 33% of national output) “do not really correspond to market reality”. In Germany, the industry already controls 5% of European milk production. In Denmark, 80% of milk comes through cooperatives. “Is there equality of strength between your proposal and these dairy mergers and large groups?” he asked. The organised supply arrangements and the supply conditions for milk producers “are set at so low a level that their impact will be too limited to be effective”, stated José Bové (Greens/EFA, France). Analysing the measures proposed, “it is clear to see that the competition commissioner remains fiercely opposed to the idea of fair regulation,” he went on (referring to discussions within the college of commissioners on the cap for contract negotiation).
Lorenzo Fontana (EFD, Italy) wondered if these figures were sufficient to allow producers to survive.
Paolo De Castro (S&D, Italy) who chairs the EP agriculture committee, called on the commissioner to include in the dairy market legislation a definition of the role of geographical indication owners' consortia in production volume management, as the EP had sought in a March 2010 report on product quality.
In response to MEPs' questions and comments, European Commissioner Dacian Cioloº said that price volatility and speculation would be tabled at the G20 by France when it holds the G20 Presidency in 2011. “I will put proposals to the college of commissioners to see if it can give a commitment to work on this issue. The G20 is, I think, the right place to deal with this matter at international level”, he said. On the figures for negotiating contracts with multinationals, the commissioner said that the percentages proposed “give enough power to producers” and also “protect competition on national markets” by avoiding “monopolies and oligopolies on national markets”. He stated that in 21 member states, cooperatives accounted for more than 50% of production. “The producer organisations which come under this regulation, then, are targeting the remainder of production, that is, 42% of European milk production given that 58% of milk production in Europe comes through cooperatives,” he said. (L.C./transl.rt)