Report from Brussels on the milk market and dairy regulations

The European Commission today, 13 June, published a report on the development of the dairy market and the functioning of the 2012 milk legislative packageThe report outlines a relatively positive outlook for the dairy market, assesses the implementation of the rules and the use of the opportunities offered by them. It also sets out further considerations in view of the abolition of the quota system in 2015.

.

This dairy package, adopted under the codecision procedure in 2012, aims to improve the position of milk producers in the milk supply chain and prepare the sector for a more market-oriented and sustainable future. It also takes into account the lessons learned from the 2009 milk crisis. Member States may make it mandatory for milk producers and milk processors to conclude written contracts. Farmers have the possibility to collectively negotiate the terms of the contract, for example on the price of raw milk, through producer organisations. Specific EU rules for interbranch organisations allow for consultation and a number of other measures among the actors in the dairy supply chain. Member States are also allowed to apply rules governing the supply of PDO/PGI cheeses, subject to certain conditions.

.

The report confirms that contracts between farmers and processors are now mandatory in 12 Member States (Bulgaria, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Portugal, Romania, Slovakia, Spain and Hungary). In some other Member States (Belgium and the United Kingdom), farmer and processor organisations have adopted codes of good practice. 228 such organisations are officially recognised by national rules on the recognition of producer organisations in six Member States (Belgium, Czech Republic, France, Italy, Spain and Germany). In four of these Member States (Czech Republic, France, Spain, Germany), producer organisations have held collective negotiations for 4-33 % of total deliveries. Two Member States (France and Italy) have chosen to apply rules governing the supply of individual PDO/PGI cheeses.

.

The Commission considers that it is still too early to expect a significant impact of the Milk Package on the dairy sector, especially in disadvantaged regions. Time and a high level of farmer engagement are needed to effectively exploit the opportunities offered by the Milk Package, such as the establishment of producer organisations and collective bargaining.

.

The Commission has recently taken another step to help the market after the end of quotas: it has set up a European Milk Market Observatory. The aim is to improve market transparency and analysis that operators can use to make business decisions. The Observatory will help the Commission monitor the market situation, proactively use the 'safety net rules' and react in emergency situations.

.

Overall, the outlook for the global dairy market is positive, with strong growth potential in the coming years. However, the report reflects the doubts expressed as to whether this EU legal framework can really help in the event of exceptional market fluctuations or crises after the end of the quota system and whether it will be able to ensure a balanced development of milk production across the EU and avoid excessive concentration in the most productive areas. The report confirms that the Commission will continue the discussion on these issues and will examine the need for additional instruments and how broad their scope should be.