Bruxelles, 14/03/2011 (Agence Europe) - On Tuesday 15 March, a majority of MEPs at the European Parliament agriculture committee described the draft report by James Nicholson (ECR) on measures for helping milk and milk products as being too lukewarm. MEPs called for adjustments and improvements to contracts and for raw milk contract volumes to be negotiated with the dairies, through a producer's organisation. According to the proposals, this volume is limited to 3.5% of the EU market and to 33% of total national production of any member state covered by these negotiations.
Speaking on behalf of the S&D Group, Marc Tarabella from Belgium said that the price volatility problems required tough regulatory measures but he did not feel this had been taken into account in the measures.
This is the first time that Nicholson has presented his draft report. He recognised that there were divergences regarding key questions in the package of proposals on milk, which reflected the milk processing sector and producers. He said that it is clear that member states have different priorities but that he had, nevertheless, attempted to put forward a balanced text.
Contracts. The proposal seeks to establish optional written contracts between milk producers and dairies before deliveries. Clarification on prices, deadlines and delivery volumes, as well as contract duration, should be contained in these contracts. Member states would be free to make these contracts obligatory in their own territory. Exemptions are included for cooperatives, in an effort to take into account their specific requirements. The amendments of the rapporteur primarily aim to introduce greater maximum flexibility into these contracts. The rapporteur explained that contracts should contain end-clauses and clauses for renegotiations. He added that producers should not be obliged to commit 100% of their production to a single supplier. Conclusion of contracts should remain optional in member states, stated Nicholson. According to his amendments, all milk producers should be able to request the conclusion of a contract responding to minimum conditions established in the proposal, even if a member state has decided not to make these contracts obligatory.
Michel Dantin (EPP, France) declared: “There are many of us who are aware of the example of Switzerland, which abolished quotas in 2009. We are looking at how these contracts will be able to exclusively manage the market in a sustainable way. Shouldn't the report contain a rendezvous clause to see whether the contract system set up proves sufficient?” Producers should have the resources for really being able to negotiate with their clients. The MEP wondered if they shouldn't “go a little further than proposed by the Commission and the rapporteur in the definition of the contracts and in the guarantees given to contract negotiators”.
Marc Tarabella (S&D, Belgium) thought that contracts should provide an indication of volume, price and duration.
Britta Reimers (ALDE, Germany) called for greater flexibility in the delivery contract clauses. She also said that farmers should be allowed to conclude contracts on an optional basis. “They should not all be compelled to do so based on a certain model”, she explained. She did, nonetheless, consider that the draft report went in the right direction.
Producers' collective bargaining power. The Commission proposals intend to enable producer organisations to collectively negotiate contract clauses with dairies, with regard to price and all or part of their members' production. In order to maintain effective and fair competition, this possibility will be subject to quantitative limitations. Rapporteur, James Nicholson, is advocating that the collective negotiating power of producer organisations be limited to 20% of total raw milk production or 20% of total cumulated national production of all member states affected by these negotiations (as opposed to 33% advocated in the initial European Commission proposal). He explained that he had shifted from 33 to 20% and hoped to obtain amendments on this figure in an effort to find a compromise. He explained that he had begun with quite a low figure and hoped to see other proposals in this connection from MEPs.
Tarabella would have liked the figure to be above 33% because the relationship and power between producers and the industry is imbalanced. He said that this balance needed to be re-established and that “the stronger producers are, the more negotiating power they will have”. He also thought it necessary to allocate a role to the public authorities in the regulation process.
Reimers said that they needed to be careful because when producer organisations were strengthened, they had to make sure monopolies were not created. On the subject of setting prices she warned that they should not return to “old market policies”.
Martin Häusling (Greens/EFA, Germany) said that there were many monopolies that prevented producers from choosing their own dairies. He said that this was the case in the north of Germany and in Denmark. He also claimed that “James Nicholson is making the situation even more difficult by setting a 20% ceiling…33% or 20% are not appropriate because in many countries there is a high concentration of dairies. We need the situation to be fair for producers.”
The rapporteur also intends to include an exemption for member states that have a low annual production of milk. This exemption would enable producers in these countries to collectively negotiate contract clauses that account for 75% of production.
Nicholson's Amendment 16 intends to protect cooperatives. The Commission is proposing that these co-operatives benefit from an exemption. He believes that the text is not, however, sufficiently clear on this point.
Transparency. According to the proposal, raw milk processors will have to declare to the appropriate national authority the quantity of raw milk delivered to them each month, in an effort to accurately assess overall production and supplies of milk in the Union. The amendments proposed aim to take into account (before publication) the sensitive nature of this information, from a commercial point of view.
The European milk sector will be radically transformed after the expiry of quotas in 2015. Nicholson said that he would look at whether the Commission would be able to reduce the burden on member states experiencing “a hard landing”.
According to Dantin, commercial security of the acts in this connection, as well as the commercial code, should be guaranteed. He did say, however, that accurate knowledge of market data was required and that they needed to be intransigent on transparency conditions.
Tarabella said that it was necessary to give the public authorities a role to play in the regulation process. He mentioned the idea of a “national authority for setting prices and margins”, which would ensure that prices did not fall under a certain threshold.
A soft landing, as proposed by the European Commission, is utopian, concluded Häusling.
EMB unhappy. In a press release, the European coordinators for Via Campesina and the European Milk Board affirmed that the amendments proposed in the Nicholson report are far from being appropriate for developing an optimum milk market where there are fair prices for producers. The two European organisations consider that any measures taken should be aimed at preventing future market distortion, whilst allowing milk producers to cover their production costs through market prices. In order to achieve this goal, effective control of total market production is indispensable. In the opinion of the EMB and Via Campesina transparency and a fair distribution of the remaining margins in the value-added chain represent another important objective in European policy that should be aimed for. Contracts between producers and processors should not be legally valid unless they take into consideration the average cost of production in the EU. (L.C./transl.fl)