The report published by the European Commission on Thursday 24 November on how the 2012 milk package has been operating indicates that the rules have worked well and could be extended beyond 2020. Indeed, the measures could perhaps be applied in sectors other than milk.
The series of measures launched in 2012 to strengthen the position of Europe’s dairy producers in the supply chain have had a positive effect and, so that their full potential can be realised, with increased means, they should continue to apply beyond 30 June 2020, the second report on the milk package says.
Model for future CAP? The recent report by the working party on agricultural markets (see EUROPE 11667) and the report on the operation of the 2012 milk package, in a way, flow into the same river. And at the mouth of this river, the latest reform of the common agricultural policy (CAP) is taking shape.
In its work programme for 2017, the Commission will be able to bring changes to the legislation on strengthening the food supply chain. The idea being floated at the Commission is to take the parts of the working party report that the Commission can agree to and build them into a proposal on extending the milk package beyond 2020 (the provisions of the package expire on 30 June 2020). The Commission may also be considering extending those parts that strengthen the position of farmers to sectors other than milk. The milk package focused on farmers and processors; the big question now is the extent to which retailers can be included.
Compulsory delivery contracts. The report notes that compulsory delivery contracts have been widely implemented in member states where the share of cooperatives is low. This instrument, which formalises relations between producers and processors, accounts for 41% of total milk deliveries in the EU.
Producer organisations (POs) are recognised in 11 member states and, for the most part, are doing much more than negotiating prices and deliveries. 80% of POs provide one or more services that add value to the supply of milk and/or support producers’ activities, such as milk collection, quality control, technical support, and joint procurement of inputs. Successful examples should be valorised, the report states.
Collective negotiation (allowing POs to negotiate contract terms with the industry collectively on behalf of their members) with first purchasers, regarded by farmers as one of the main benefits of belonging to a PO, is to be seen essentially in Germany, France and the Czech Republic and to a lesser extent in Spain, the United Kingdom and Bulgaria, with no competition breach being reported, the Commission says.
The regulation of supply of quality cheeses is providing positive results in the two member states (France and Italy) where it is operated, protecting cheese production in disadvantaged areas.
Interbranch organisations, the Commission states, are contributing to greater transparency across the supply chain and have proved their usefulness in a wide range of activities, such as defining standardised contracts, promotion and giving technical advice.
Lastly, the provision on compulsory declarations of milk deliveries has secured a rigorous volume information system, while improving significantly the timeliness of information.
Potential to be better exploited. According to the Commission, the potential of the two key instruments of the milk package – POs and collective negotiations – has not yet been fully exploited. The report recommends pedagogical, financial and operational initiatives at EU and member state levels.
Privileged status for POs? Privileging POs over individual producers accessing aid schemes, in the form of premiums, higher priority when setting eligibility criteria or higher co-financing rates and also tax breaks at national level, could be considered. POs could receive additional financial support on condition that they achieve collective negotiation objectives. The grouping of POs into associations could also be fostered. Lastly, farmers could be obliged to belong to a PO to deliver all their milk (or a minimum share) through their PO or milk purchasers could be required to negotiate with POs and not with PO members, so as to avoid circumventing collective negotiation. (Original version in French by Lionel Changeur)