IPCMP and EMB call for elimination of unfair competition
The three-point IPCMP paper calls on policy-makers and the processing industry to take the necessary steps to create a functioning market in the dairy sector.
The EMB said the dairy sector is not an example of a well-functioning market.
Unfair competition
It said that even the German competition authority, the Bundeskartellamt, recently concluded that the sector is subject to unfair competition, which continues to hamper the good functioning of the market.
However, the EMB said, the issue is not limited to Germany.
It said the average production costs in Germany, Belgium and France are slightly over 40 eurocents ($0.49) per liter, however, much less is paid to producers, with prices ranging from 29 to 35 cents in Germany ($0.35-$0.43), around 30 cents ($0.37) in France and less than 30 cents per liter in Belgium.
Labour costs, which amount to approximately 13-15 cents/liter ($0.16-$0.20), are simply eliminated from the equation as a result, a situation the EMB says has been commonplace for many years.
Paper’s points
The paper states that production costs must become the basis for the prices fixed in contracts between dairies and producers.
In the current political-economic situation, the prices paid to consumers are not aligned with production costs (labor costs included). Even though they are the suppliers, producers have no way of determining the sales price. Against this background, contracts must at least guarantee cost-covering prices that consider real production costs.
The second point in the paper is that there must be a law preventing unfair competition at producer level. As is the case in trade, where products cannot be sold below cost price, selling raw milk or raw materials from the agricultural sector at a price that does not cover production costs should be prohibited.
Finally, it argues, political measures to promote the pooling of milk producers must be implemented. While the EU Milk Package has created the possibility of pooling (i.e. negotiating milk supply contracts for a large number of producers through producer organisations in order to strengthen the market position of producers), it has not really been possible to effectively use this provision to date.
The IPCMP's paper on eliminating unfair competition in the dairy sector is addressed to national governments in the EU as well as to the European Commission and the European Parliament.
