Brussels, 15/02/2012 (Agence Europe) - On Wednesday 15 February, the European Parliament approved the text on contractual relationships in the milk and dairy products sector, born of a compromise with the Council. The dairy package is one of the first major legislative acts in the field of agriculture adopted at first reading under the ordinary legislative procedure brought in by the Lisbon Treaty.
The regulation gives the member states the option to make milk delivery contracts between producers and processors obligatory. It allows dairy producers who wish to do so to work together in producer organisations to strengthen their position in the supply chain, particularly by the collective negotiation of supply contracts for their milk. They may benefit from the opportunity allowed to the member states to impose an obligation on buyers of milk to propose a contract to dairy producers, together with a minimum duration of six months. The need to take account of the specific nature of cooperatives is also reflected in the final text. The dairy package stresses the role which can be played by the inter-professions getting producers, the industry, traders, but also consumers together around the same table. The regulations set in place the necessary framework for the monitoring of milk supplies once the milk quota regime expires (in 2015), providing for the necessary data to be provided in good time, thus giving the Commission the opportunity to provide milk producers and players in the dairy market with market information in plenty of time. The dairy package will also play a vital role in regulating supplies of high-quality cheese with geographical indications, which will, amongst other things, benefit vulnerable regions in terms of added value and sustainability.
Contractual relationships. The regulation gives the countries of the EU the opportunity to make it compulsory to lay down a written contract between milk producers and dairies which purchase raw milk. It also obliges milk purchasers to offer farmers a minimum contract term. This minimum term will be at least six months and may not hinder the smooth functioning of the internal market. The contract and/or the offer for a contract must be made in advance of the delivery, be made in writing and include, in particular, the following elements: - the price payable for the delivery; - the volume of raw milk which may and/or must be delivered and the timing of such deliveries; - the duration of the contract, which may include either a definite or an indefinite duration with termination clauses; - details regarding payment periods and procedures; - arrangements for collecting or delivering raw milk; - rules applicable in the event of force majeure. All elements of the contracts for the delivery of raw milk concluded by farmers, collectors or processes of raw milk “shall be freely negotiated between the parties”, according to the text of the regulation. Furthermore, the farmer has the right to refuse a minimum duration. A derogation is provided for cooperatives (which are not subject to the written contract obligation), in order to take account of their specific nature, as long as their statutes contain elements producing similar effects.
In order to strengthen the negotiating power of the farmers in the face of the industry's muscle, the regulation makes it possible to allow farmers to negotiate contracts collectively (including the price for raw milk) through producer organisations. According to the text, “a producer organisation in the milk and dairy sector may negotiate, on behalf of its member farmers, contracts for the supply of raw milk from a farmer to a processor of raw milk or a collector.” The negotiations may be carried out by the producer organisation as long as, for a specific producer organisation: - the volume of raw milk covered by such negotiations does not exceed 3.5% of total EU production; - the volume of raw milk covered by such negotiations which is produced in any member state does not exceed 33% of the total national production of that member state; - the volume of raw milk covered by such negotiations which is delivered in any member state does not exceed 33% of total national production for that member state. For countries with total production of less than 500,000 tonnes (Luxembourg, Cyprus and Malta), the applicable limit on the volume covered by these negotiations is 45% of national production, instead of 33%.
Regulation of supply for quality cheeses. By request of a recognised producer organisation or inter-professional organisation, the member states may define, for a certain period of time, binding rules on regulating the supply of cheeses with protected designation of origin (PDO) or protected geographical indication (PGI), according to the text of the regulation. This agreement must be concluded between at least two thirds of milk producers or their representatives and, in the case of a group of PDO/PGI producers or cooperative, between at least two thirds of the producers of the said cheese, representing at least two thirds of cheese production. These rules cover only the regulation of supply for the product in question and aim to adapt supplies of this cheese to demand, and can be made binding for a maximum of three years (they can be renewed at the end of this term, if a new request is made). Furthermore, these rules will be subject to strict conditions, in particular to avoid negative effects for the sale of products on other markets and to protect the rights of the minority. The member states must immediately publish and notify the Commission of the rules adopted, ensure that regular checks are carried out and cancel the rules in the event of any problems.
The regulation also lays down specific EU rules applicable to inter-professional organisations. They will allow these organisations to enter into dialogue and carry out certain activities which are exempt from the competition rules. These activities include: - improving the knowledge and transparency of production and the market; - research, innovation and improvement of quality.
Two meetings. The regulation will apply until mid-2020 and two meetings are scheduled to take stock of the application of the provisions brought in by the dairy package, the first of these between now and the end of June 2014 and the second by the end of December 2018. At each of these meetings, the Commission will present reports on developments in the market situation in the dairy sector. “The effects on producers in the least-favoured regions will be evaluated, in line with the general objective of preserving production in these regions”, promised Dacian Ciolos. Potential incentives to encourage farmers to conclude joint production agreements will also be assessed.
Plenary debate. To begin with, positions were poles apart, but it was possible to reach an acceptable agreement, said James Nicholson (ECR, UK) on Tuesday 14 February. Although the package does not solve every problem, he said that it boosts the negotiating powers of producers and fulfils the Parliament's requirements regarding quality and flexibility. That said, the Parliament should not hesitate to fight for any improvements it sees as necessary.
The Commission's proposal has been “enriched” by the Parliament's contribution, said Dacian Ciolos. Speaking at the end of the debate, he said that the quotas system currently in place (which expires in 2015) “is no longer a solution under current market conditions”. As regards the transparency of the food chain and the negotiating lines between producers, processors and retail distribution, he pointed out that the Commission has set up a forum on the food chain, which is currently working on all of these issues. In June of this year, stock will be taken of the forum's work, in particular regarding the proposals made by parties active in the food chain. On this basis, the Commission will come before the EP and the Council with the report and, if required, proposals.
The agreement has been the subject of “proper dialogue”, said Michel Dantin of France, on behalf of the EPP. He welcomed the package, but added that it was just one stage in the process, leaving open certain issues such as the effects of the scrapping of milk quotas and the cases of “fragile areas”. On behalf of the S&D, Belgium's Marc Tarabella acknowledged the merits of the agreement, even though he is among those who regret the decision to get rid of milk quotas. The package contains some good things, even if it has been improved (a view shared by many MEPs who took the floor during the debate). For once, Tarabella took pains to pay tribute to the excellent work on this dossier by a Parliament civil servant, Patrick Baragiola.
Although the majority of the EP was able to accept the package, some people have their doubts about the improvements it is supposed to bring with it. On behalf of the Greens/EFA Group, Germany's Martin Häusling lamented the fact that the member states appear to think more about their industry than they do about their producers. He wondered what would happen if prices plummeted: will export premiums be paid? On behalf of the GUE/NGL, the Portuguese member Joao Ferreira attacked the “disastrous decision to end quotas”, a decision which he feels should be reviewed as a priority in order to avoid the ruin of producers in certain countries. Similarly, France's José Bové said that the package provides no assurances of a balance between producers and industry: I do not believe, he said, in the illusion that “vegetarian lions will graze alongside sheep”. Lastly, Bové referred to the case of Denmark, where formerly rock-solid farms are currently going bust.
Can we really speak of the “soft landing” we were promised, with a phasing-out of the quotas, asked certain MEPs, among them Dutch member Esther de Lange, who also called for more transparency regarding margins (amongst other things, she referred to the case of exorbitant margins on cheese in supermarkets). Many of those who took the floor raised problems in their countries: Luxembourg's Georges Bach (EPP), who stressed concerns regarding the fate of young milk producers, Liam Aylward of Ireland (ALDE), who reiterated the vulnerability of this sector in his country, and Maria Patrao Neves (EPP, Portugal), who voiced her concerns at the effects of the package on producers in the Azores. Lastly, questions were raised about the effects of the package on consumers. (LC/LG/transl.fl)