On March 15th, 2011, a member of the European Parliament introduced his report of the European Commission’s “Milk Package” meant to address problems associated with the cause of low farmgate prices. The Milk Package, by emphasising contractual relationships, aims to even the lack of
countervailing power experienced by dairy producers in the market, while promoting greater transparency among various links in the producer-processor-retailer chain. As the EU continues to phase out supply management, drafting measures that endorse a properly-functioning market in which dairy farming remains profitable will be a focal point.
Several groups, including the European Coordination Via Campesina and the European Milk Board, have already voiced their disappointment in the package and its proposed amendments, suggesting that the proposed measures will fall short of achieving a fair price for dairy farmers.
The Milk Package, in addition to stressing contract negotiation, also seeks to limit the size of Producer Organisations (POs) that represent dairy farmers. Under the January 11th presentation of the scheme, a single PO will not be allowed to represent more than 33 % of a nation’s production, and no more than 3.5% of EU’s total milk. Countries with larger production, such as Germany, are expected to have 5 to 6 Producer Organisations, while smaller nations will be required to have a minimum of three.
Dairy producers have experienced a lack of bargaining power in, arguable, all forms of milk market schemes found around the word. It is the Commission’s hope that requiring mandatory contracts to be agreed upon between producers and processors in advance to delivery will help ensure the profitability of the European dairy industry. The adoption of this legislation is expected to go into effect 2012, and be valid until at least 2020, with two intermediary reviews.
More information about the Milk Package can be found here.