The Agriculture Committee believes that milk producers should have more bargaining power

The Agriculture Committee at the European Parliament amended a draft EU regulation on milk contracts to boost dairy farmers' bargaining power. According to this Committee, farmers should be able to join producers' organisations that can negotiate raw milk deliveries for them and ensure that they get a fairer share of the price paid by consumers. In addition, the Committee also proposed a supply management system in order to improve the working of the market for dairy products registered under a protected designation of origin (PDO) or protected geographical indication (PGI).

MEPs believe that farmers must be enabled to negotiate fairer prices through producer groups, pricing practices must be made clearer throughout the distribution chain, and dairies must be made to report their monthly purchases. With these measures, their bargaining power will increase. Also, the volume of raw milk covered by such negotiations and produced or delivered in any Member State may not exceed 40% of total national production of that state, - i.e. 7% more than in the original EC proposal - and 3.5% of the total EU production, to avoid the formation of cartels.

On the other hand, the new regulation proposed foresees that a written contract would cover every raw milk delivery from a farmer to a processor. An amendment inserted by the Committe adds that it will be up to the Member State concerned to decide which stage should be covered, if the delivery is made through one or more collectors. Furthermore, these contracts would have to be concluded before the delivery, and would have to state a milk price fixed for no less than one year.

The Agriculture Committee also called for a Market Monitoring Agency to be established to collect and disseminate various production and supply data in order to give early warning of possible future milk market imbalances. MEPs were also concerned that these new rules may not suffice to overcome all the difficulties facing dairy farmers, and especially those with small herds or in remote areas, called on the Commission to table further measures for dairy farmers in its legislative proposal, due in late autumn 2011, for the Common Agricultural Policy (CAP) reform.