EDA Warns Against Intervention In Dairy Supply Chain

EU - The European Dairy Association (EDA) has warned that intermediaries and standardised contracts are not the answer to concerns about imbalances in the dairy supply chain.

1 February 2010

2 minute read

According to Foodproductiondaily.com, some commentators are arguing for strong pan-European contracts and third party representation for farmers to prevent processors from creaming off the profits from the dairy industry at the expense of farmers.

The EDA is lobbying against these proposals as the newly created EU High Level Group (HLG) on milk seeks to redefine the future relationship between farmers and processors.

One of the key objectives of the HLG is to determine what can be done to improve the bargaining power of milk producers.

Responding to this call, the EDA, which represents the interests of dairy processors, has argued against a French proposal for intermediaries to negotiate with processors on behalf of farmers.

The EDA general secretary Joop Kleibeuker said that those negotiating about supply should have economic responsibility for the goods concerned.

Mr Kleibeuker also pointed out that over 50 per cent of the milk collected in Europe is processed and distributed by cooperatives in which farmers have a stake. This, he said undermines the assumption that processors and producers operate separately with distinct interests and agendas.

In Europe, the relationship between producers and processors is not straightforward, and according to Mr Kleibeuker, this complexity should also inform discussions about contracts.

The EDA general secretary said the EU should be careful not to lay down contracts in regulation because the relationship between farmers and processors is so varied that a one size fits all approach to contracts would be inappropriate, reports Foodproductiondaily.com.

Mr Kleibeuker said the EDA is now focusing its efforts on raising awareness about how the dairy supply chain works today. The trade body has organised a seminar entitled “The Dairy Supply Chain Revisited”, which will take place in Brussels on 3 February.

Featuring speakers drawn from all corners of the supply chain, Mr Kleibeuker said the idea behind the seminar is to contribute to the body of knowledge on the dairy supply chain. He said there is a lack of good analysis of how the dairy supply chain works today so by drawing people together from across the industry, Mr Kleibeuker said the EDA can help inform the debate on the future of the supply chain.

Confirmed speakers include Ake Hantoft, vice chairman board of directors at Arla, and Paul Campbell, general manager strategy at Fonterra Co-operative Group.