Brussels, 28/06/2011 (Agence Europe) - The European Parliament (EP) agriculture committee has brought amendments to the proposals on contractual relations in the milk and dairy products sector. With its adoption on Monday 27 June, by 34 votes to 3, of the report by James Nicholson (ECR, UK), the committee decided that every delivery of raw milk from a producer to a processor should be covered by a written contract. Negotiations with Council will now be able to get under way in the search for first reading agreement.
It is somewhat unusual to have formal, written contracts, even restricted to the basic points, concluded before delivery. After quotas are abolished, contracting prior written agreements could be a way to make operators along the milk sector supply chain more responsible and increase their awareness to the need to take account of market signals, share more fairly the price paid by consumers and encourage matching supply and demand. It would also have the advantage of obstructing certain unfair trade practices.
The Commission's proposal provides for voluntary written contracts between milk producers and dairies before delivery. These contracts must state price, timescale, amount of deliveries and length of duration of the contract. The Commission proposes that member states should be allowed to make contracts compulsory within their borders. The agriculture committee was critical of this point, arguing that it could distort competition. Thus it called for contracts to be compulsory. In addition, the amendments seek to allow countries to set a minimum length for these contracts (in France, it is five years).
Producers' negotiating power. The Commission proposes that producers' negotiating power with processors be strengthened, which ought to result in a more fair sharing of the added value along the whole length of the supply chain. Commission proposals would allow producers' organisations to negotiate clauses in the contracts, including prices, for all or part of their members' production, collectively with dairies. In order to maintain fair and effective competition, quantitative limits would be imposed. According to the initial proposal, the amount would be restricted to 3.5% of the EU market and to 33% of the total national production of any member state involved in such negotiations. The agriculture committee, by way of compromise, opted for 3.5% of total EU production and 40% of total national production of any member state involved in collective negotiation (at first, the rapporteur proposed 20% and several MEPs argued for more than 33%). An amendment seeks to allow those member states, where production is less than 500,000 tonnes to increase the percentage to up to 75% of national production. This would affect Luxembourg, Cyprus and Malta only.
To improve the working of the market for dairy products registered under a protected designation of origin (PDO) or protected geographical indication (PGI), the committee proposed a supply management system, which member states may establish provided that it will in no way harm competition on the single market or lead to small producers being adversely affected.
The report also allows inter-branch organisations in the milk sector to be set up or strengthened.
Monitoring of prices. Production volumes and average prices paid for raw milk would have to be declared by the first purchaser each month under an amendment approved in committee. MEPs also call for a Market Monitoring Agency to be established to collect and disseminate various production and supply data in order to give early warning of possible future milk market imbalances.
Reacting to the vote, José Bové (Greens/EFA, France) said that the price of milk had risen slightly over they last two years “but we are still far from what is needed”. In many regions, the price paid barely covers production costs. “This still unacceptable situation is causing many farmers to leave milk production and concentration in milk factories”, he commented. The debate on the reform of the common agricultural policy (CAP) has just begun. “The issue of matching supply and demand must be discussed honestly. Only then will food sovereignty through independent, sustainable production systems continue to exist in the milk sector in Europe”, Bové argued. (L.C./transl.rt)