June 29, 2011

Scotland's MEP support mandatory milk contracts

A Scottish MEP has hailed Monday's (June 27) vote on the Nicholson Report on contractual relations in the milk industry a major boost for the country's milk processors.

The European Parliament's Agriculture and Rural Development Committee voted in favour of an amendment calling for mandatory written contracts across the sector across the EU, and supported greater transparency and information requirements in the milk market, such as volumes delivered and prices paid.

Scottish Nationalist Party MEP, Alyn Smith said, "It's been clear for some time that there are deep structural problems in the milk market thanks to an inadequate form of deregulation that left dairy farmers without adequate bargaining power and without even the security of knowing what price they would receive for their delivery. When producers are consistently receiving a price lower than their production costs there's clearly something wrong, and while mandatory contracts are not a silver bullet they will at least be a start towards the rebalancing we need to see."

"That's why I'm delighted that my colleagues took up my proposal for mandatory written contracts. NFUS have done a lot of good work with their campaign for a new milk price formula, and I think with this vote we've provided them with the necessary European legislative backing, now that contracts will be compulsory. I'm disappointed but not surprised by the failure of the UK Government to back these demands.  Once again, they have shown an inability to comprehend the fact that the free market simply is not working, and have proven all too reticent to take the root-and-branch action required to help those that grow and raise our food.  Scottish farmers need action, not timidity, and that's what they got today," Smith added.

Under the new regulation, every raw milk delivery from a farmer to a processor would have to be covered by a written contract. 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, said MEPs.

At present, milk prices in much of the EU are often fixed only after delivery, on the basis of the profits made by dairies, which means farmers must sell without knowing how much they will earn.

The move was welcomed by the NFU which said it could help strengthen dairy farmers' position when negotiating with processors.

NFU dairy board chairman Mansel Raymond said, "Too many farmers are locked into a contract with long notice periods and no ability to alter the situation– this proposal will allow for better negotiation of contract terms both before signing and during the contract term. Importantly termination clauses also make up part of the plans. We hope these proposals will help redress the power balance between producers and processors to give dairy farmers longer term certainty over their milk price, volume and contract length."