Milk supply contract rules should apply to all purchasers “without exception”

The ICMSA insist the requirements under mooted legislation governing written contracts between milk processors and their suppliers must apply to all.

Chairperson of ICMSA’s Dairy Committee, Noel Murphy was commenting on the current discussions in relation to milk supply contracts at EU level.

Mr Murphy said that it is ICMSA’s strong view that the requirements under the legislation - when finalised and agreed - should apply to all milk processors, including co-operatives, and without exception. Mr Murphy stressed there should be no ‘Get Out’ clause for anyone.

“While the detail of the proposed contracts can be refined, the principle of greater protections for individual milk suppliers should be applied to all and supported by all”, said the ICMSA Committee chairperson.

“In the context of the reduced importance of CAP payments due to convergence and the lack of indexation, the returns from the marketplace have assumed paramount importance.

“It’s imperative that farmers can judge their milk processor’s performance over time and, in particular, that the price being paid at any given time can be seen to be reflective of developments in the marketplace and that their Co-op is performing as well as other milk processors.

“ For too long, links further along the supply chain have been very good at quoting milk production costs to farmers and the need for us to get ‘lean’. The reality, of course, is that there is huge transparency around farm production costs but thereafter we have a mystery all the way up to the consumer,” claimed Mr Murphy.

Mr Murphy said that farmers are price takers and from discussions at the European Milk Board with farmer-colleagues from across the EU, it was clear that farmers were always the ones taking the ‘hit’ for market volatility.

“This just has to change, family farms need a minimum degree of certainty in exactly the same way and for the same reasons as everyone else does. The proposal under the CMO for compulsory contracts or their equivalent under Co-operative rules is a step in the right direction and properly functioning Co-operatives across the EU should have nothing to fear from this legislation that just provides farmers with greater certainty and mechanisms to address areas of concern in relation to milk price and other issues. The Irish Co-operative sector has served farmers well and our Co-operatives should have no issue meeting these requirements” he continued.

Mr Murphy concluded by pointing out that the dairy sector from processor to retailer is getting more concentrated and integrated by the day with the farmer effectively at the mercy of those further along the supply chain.

“The farmer needs greater protection and the proposal on milk supply contracts will help in this regard and should be supported by the Irish dairy industry and our government.”