EU fails to agree on dairy market reforms

Ministers debated over the report – issued by the Higher Level Group (HLG) that was formed in in response to last year's dairy sector crisis – that presents seven key recommendations on how the sector should be reformed.

At the top of the list of proposals is a call for enhanced written contracts between producers and processors, and is an issue that has been disputed by the European Dairy Association (EDA).

Failure to reach consensus​

At a meeting in Brussels, 22 of the EU's 27 states, including France, Germany and Italy supported the proposal, but there was opposition from Britain, Sweden, the Netherlands and Denmark.

If the Commission decides to propose changes to EU competition rules, the other 22 states will still have a sufficient majority to pass the plan under the EU's weighted voting system, despite the opposition of the five others.

Lack of clarity ​

A spokesperson from Dairy UK, an association that represents the UK dairy industry, told DairyReporter.com that there seems to be a lack of clarity about precisely where the commissioner stands on changing competition law in respect of producer organisations.

Dairy UK said that “The ball is now in Ciolos’s court” ​and that it will be for him decide what proposals to bring forward to the Commission College, adding “There clearly is a need to clarify competition law and the opportunities open to producers to collectively market their products. That would be welcomed. We would still, however, be opposed to any form of exemption that could fundamentally distort the market.”​

Controversial contract changes​

Some of the changes to the competition rules have been disputed by ministers and bodies across the industry.

In July this year, EU agriculture ministers debated over the dairy policy recommendations. The balance of power between farmers and the rest of the industry was a key area of disagreement.

One of the report’s main proposals encourages the use of more formal contracts to set out advanced terms such as price, volume, timing and duration, and suggests that member states could make the use of such contracts compulsory.

However, the EDA, which represents the processors, claims that although contract guidance would be helpful, making a single set of contracts would not be beneficial in consideration of the breath of different organisational set-ups and contractual relationships.

EDA secretary general, Joop Kleibeuker told DairyReporter.com this week that the current framework, without a formal cooperation contract, allows for a lot of possibilities for dairy farms to work together, adding that “​over time, a natural balance between the interest of co-ops and private companies has developed” ​and that a change to the rules could damage it.

Kleibeuker said, “We think of the proposals foreseen for the end of the year, the commission should be very careful to any change in competition rules at the moment.” ​

The European Commission is due to make legislative proposals on reforms to the EU dairy sector – possibly by November – which will draw on the findings of the HLG report and the views of member states.