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Contractual relations in the milk and milk products sector

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Wednesday, 15 December 2010

Contractual relations in the milk and milk products sector

At the 3059th Council meeting on Agriculture and Fisheries held in Brussels on  13-14 December 2010, Ministers were briefed on a proposal for a regulation amending regulation N°1234/20071 as regards contractual relations in the milk and milk products sector. Most delegations welcomed the Commission proposal highlighting the measure allowing the producers to join together to negotiate and establish contracts with the dairy companies. The importance of the role of inter-branch organisations and of increased transparency were also underscored. However some Member States recalled that the proper functioning of the single market should in any case be guaranteed.As regards relations between milk producers and dairies, the concentration of supply is often much lower than concentration at processing level. This results in an imbalance in bargaining power between these levels. The proposal provides for optional written contracts to be drawn up in advance for deliveries of raw milk by a farmer to a dairy which would include the key aspects of price, the timing and volume of deliveries, and the duration of the contract. Inter-branch organisations cover part or all of the supply chain: farmers, processors, distributors and retailers. They can potentially play useful roles in research, improvement of quality, promotion and spreading of best practice in production and processing methods. It is proposed to apply the rules of existing inter-branch organisations in the fruit and vegetables sector with appropriate adaptations, tothe dairy sector. They would contribute to improving knowledge and the transparency of production and the market.

Source: Council of the European Union