Farm Ireland
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Tuesday 21 February 2017

Cool response to new EU contracts

New dairy supplier rules do nothing to avert price collapse, says ICMSA chief

Published 14/12/2010 | 05:00

Farm organisations have given a cool reception to new dairy supplier rules proposed by the EU.

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Following last year's dairy crisis, the EU Commission has come up with a set of proposals that will allow dairy farmers to insist on written contracts specifying the price, volume and duration of any deal for their milk.

However, the ICMSA slated the proposals, claiming that they did not contain a single measure that would prevent a repeat of the 2009 price collapse. Relying on contractual arrangements between suppliers and dairies would not work, according to ICMSA president Jackie Cahill.

He said the Commission was pre-occupied with protecting the position of milk processors instead of putting forward provisions to address the overwhelming position of multinational retailers.

IFA dairy chairman Kevin Kiersey said that "this draft legislation fails to tackle the retail end, and it is ultimately from the retail trade that farmers get a price for their produce".

Dominate

The announcement has no implications for co-op suppliers. Instead, it is designed to protect farmers supplying privately owned dairies that dominate the sector in some of Europe's largest dairy markets such as Britain and France.

IBEC's dairy policy spokesman, Michael Barry, said that as 54pc of EU milk is delivered to farmer-owned co-operatives, the Commission's proposal for farmer producer groups to negotiate with farmer-owned cooperatives would achieve little.

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However, Kerry suppliers, in the midst of negotiations over their stake in the future of the company, may take some solace from the proposed rule changes.

Kerry suppliers are facing the prospect of dealing with a privately owned company rather than a co-op in the near future if proposals by the plc's board are followed through. By further diluting of their stake in the plc, some suppliers are worried that they will be left in a poorer bargaining position on milk supplies in the future.

Quotas

At the announcement of the new proposals, EU Agriculture Commissioner, Dacian Ciolos, also said that the low value attached to milk quota across much of the EU proves that the 'soft landing' post milk quotas was still on track.

This will not please Irish milk men who are facing a possible super-levy situation after 2011 due to massive increases in dairy cow numbers.

However, the Commission added that, in exceptional cases and where existing policy measures are insufficient, they could consider a mechanism that would allow milk producers to be compensated for reducing their deliveries in order to avoid serious imbalance in the market.

Irish Independent