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Milk Package Offers Some Hope

30 June 2011

EU - A resolution on the milk package of the Committee on Agriculture of the European parliament has offered some rays of hope but the future of the milk market remains uncertain according to the European Milk Board.

The president of the European Milk Board (EMB) said: “We can see that the political work of milk producers was not completely in vain as a small part of the EMB demands were taken into account.

"The overall result of the vote of the Committee on Agriculture is, however, not apt to cope with the challenges of the milk market. The latest decisions of the Committee on Agriculture cannot prevent the next crisis.”

The EMB said the installation of a reporting system where amongst other things data on volumes and prices of milk purchases will be passed on to national institutions.

“This will allow a monitoring of the market and should be extended to form a European monitoring agency,” said Romuald Schaber.

“This monitoring agency should also determine the full costs of production in the EU and calculate, based on these costs, a milk price corridor. The supply could thus be adjusted according to the demand.”

The EMB said that while the European Commission wanted to leave it up to the member states to decide whether they want to introduce compulsory contracts in their country the Committee on Agriculture finally made up its mind to opt for compulsory contracts in the EU.

“Even if the terms and conditions of these contracts will still have to be improved tremendously the fact that they will be valid throughout the EU is a positive starting point” said Mr Schaber.

“The risk that milk producer are pitted off against each other would be diminished,” added the EMB president.

The pooling limit of EU-wide 3.5 per cent does not meet the requirements of the market, he said.

“While dairies continue to merge, this limit of 3.5 per cent is a severe obstacle for milk producers. Negotiations on an equal footing are thus not impossible," he said.

The decision to exempt cooperatives from the obligation to conclude contracts with their producers is extremely unsatisfactory, he added.

He added that even producers, who are able to conclude contracts, have not escaped low prices. The terms and conditions of these contracts that were defined by the Committee on Agriculture are not yet fully developed.

“Processor and producer can fix a price, but they do not have to. The Committee on Agriculture agreed on nebulous pricing formulas or prices that are tied in with the market development – in other words a free ticket to put pressure on prices for the producers that have a weak position on the market," said Anton Sidler, the French board member of the EMB.

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