Dairy producers' position in the supply chain has been strengthened by the ‘Milk Package’, a series of measures launched by the European Commission, according to a new report.
The European Commission's second report on the Milk Package, which was launched in 2012 to help dairy farmers, found that European farmers are increasingly using the tools provided by the Milk Package.
These include collective negotiation of contract terms via producer organisations, which is designed to reinforce the bargaining power of milk producers. They also include the use of written contracts, which aim to offer better transparency and traceability to farmers.
However, the report also said that producer organisations and collective bargaining power have not been fully exploited within the industry.
It urges EU member states to foster the creation of producer organisations.
Member states should also consider expanding the role of Inter-Branch Organisations (IBOs), which contain producers and at least one member of the processing or trading part of the supply chain and allow dialogue between different parts of the supply chain.
The Milk Package requires member states to recognise dairy producer organisations (POs) that can jointly negotiate contract terms, including price, as long as they meet certain conditions.
Member states have the option to make it compulsory for dairy processors to have written contracts with dairy producers.
The report also said that the measures introduced by the Milk Package, which were originally designed to apply until mid-2020, should be extended.
EU Commissioner for Agriculture, Phil Hogan said: "The report shows that there are measures that we can take at EU level to secure a better position for dairy farmers in the supply chain."