Brussels, 14 October 2009
Milk: First meeting of High Level Group looks at contractual relations and bargaining power in the dairy sector
The High Level Experts' Group on Milk met for the first time in Brussels on Tuesday 13 October, holding constructive discussions on contractual relations and bargaining power in the dairy market. The HLG was established by the European Commission to look into the medium and long-term future of the dairy sector, particularly in view of the phase-out of milk quotas, which will be concluded in April 2015. Its work runs in parallel to the measures the Commission is introducing to stabilise the dairy market in the short term. The HLG is chaired by Jean-Luc Demarty, the Commission's Director-General for Agriculture and Rural Development and Member States are represented by senior officials. Further meetings are scheduled to take place once a month, and the HLG will issue its final report by the end of June 2010.
The meeting started discussion on the first block of issues set out in the agenda for the group: contractual relations and bargaining power. The initial round of discussions was based on the following questions:
1) Is there a need for formalised contracts between dairy farmers and dairy purchasers/processors to cover the supply of raw milk?
Would they help to reduce volatility?
Should they be obligatory for all deliveries or be at the choice of the parties?
2) What should be the essential elements of such contracts?
Price? How could this be freely negotiated between the parties whilst ensuring equivalent treatment for similar transactions?
Volume – fixed in advance? How should under-deliveries or additional volumes be provided for?
Duration – what is an appropriate period? Should a compulsory minimum period be fixed in advance?
3) How should breaches of contract be handled?
By private contract law or by direct Member State enforcement?
4) How can the bargaining power of farmers be increased?
What role could farmers' (producer) organisations play in this context?
The next meetings of the HLG will take place on 10 November and 8 December on this block of issues. Further meetings will be scheduled monthly.
Hearings will take place with stakeholders as from the November meeting. These will include, among others, organisations representing producers and processors, national competition authorities, academics, consumers, and distributors. January's meeting will also seek experiences from 3 rd countries.
It is planned to organise a conference in March 2010. An internet consultation will be launched in January 2010 and will close shortly before the conference.
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