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UK dairy 'Producer Organisation' consultation launched

By Mark Astley, 12-Dec-2012

Related topics: Regulation & Safety

The UK Department for Environment, Farming and Rural Affairs (Defra) has launched a consultation on the proposed implementation of rules that would allow English dairy farmers to form Producer Organisations (POs).

The six-week consultation on the proposed implementation of European Union (EU) Regulation 261/2012 forms part of the government’s efforts to implement the EU Dairy Package in England. Similar consultations have also been launched in Scotland, Wales and Northern Ireland.

The Regulation, which is applicable in all EU Member States, enables milk producers to set up Producer Organisation (POs) that can jointly negotiate contract terms for the delivery of raw milk to processors.

Farmers would collaborate to sell their milk to processors, rather than negotiating as individuals – increasing their influence over contractual terms, conditions and milk prices.

POs are already widespread in other European countries.

The EU Dairy Package regulations cover three main areas – enabling the establishment of Producer Organisations, making it compulsory for dairy processors to have written contracts with dairy producers, and enabling inter-branch organisations (IBOs) to seek recognition.

Industry collaboration

Commenting on yesterday’s consultation launch, UK Farming Minister David Heath said that implementing the proposed regulation would give British dairy farmers “greater clout” in the marketplace.

“England’s dairy industry is world-leading yet still has so much potential to expand, and I’m convinced that better industry collaboration is the key,” said Heath.

“We’ve already got the industry code of practice, and negotiating as groups rather than individuals will give dairy farmers an even louder voice to get their just rewards from the marketplace.”

Dairy UK, which represents the interests of the entire UK dairy supply chain, has welcomed the government’s preferred option for implementing the EU Dairy Package in England.

“Everyone involved in the negotiations that resulted in the agreement of the Voluntary Code of Practice recognises that the principles set out in the Code provide a strong basis for the future evolution of industry contractual relationships, avoiding the need for regulation,” said Dairy UK director general, Jim Begg.

“We agree with the Minister’s view that this important initiative now needs time to be put in place and its effects evaluated. It is definitely a constructive way forward for the industry.”

Positive industry development

The Scottish government also launched its consultation on the EU Dairy Package yesterday.

Commenting on the launch, Scottish Rural Affairs Secretary Richard Lochhead labelled the consultation as “one of a number of positive developments” for the Scottish dairy industry.

“Scotland’s dairy farmers have been dealing with challenging situations in recent months, thanks largely due to volatility in the price paid to producers and outdated contractual arrangements,” said Lochhead.

“However, the EU Dairy Package is one of a number of positive developments we are seeing for the industry and this consultation will give this with an interest the opportunity to air their views on the implementation of the package.”