Moves by European Commissioner for Agriculture Christophe Hansen to introduce mandatory supply contracts for farmers and other food producers have proven surprisingly divisive at EU level.
The proposed Common Market Organisation (CMO) regulations aim to “strengthen farmers’ position in the agri-food supply chain” and to foster “a higher degree of trust” between producers and processors, the Commission has claimed.
The move to introduce the CMO regulations was a response by the Commission to the widespread protests by farmers across the EU in 2024.
“Fairness for farmers is a key priority. Decent income, fair prices, stronger bargaining position in the food chain and better protections,” said Commission president Ursula von der Leyen at the launch of the CMO proposals in late 2024.
“That is why, as one of the first measures of this mandate, I am proud to announce proposals that will strengthen their competitive position.”
However, the initiative has prompted dissension and pushback from co-operatives right across the EU – and particularly those operating in the dairy sector.
But what are the main changes included in the draft regulations which were tabled by the Commission and voted through by the European Parliament?
Commission proposals
The Commission has proposed that:
Written contracts between farmers and buyers of produce should be a mandatory obligation.A minimum duration for contracts should be set at just six months.A revision clause should be included in long-term contracts, to better protect farmers and to ensure they are not locked into unfavourable terms.The establishment of mediation mechanisms between farmers and their buyers should be mandatory.Product prices should be set by combining objective indicators or using methods of calculation that are easily understandable. Price calculation methods should also be capable of reflecting changes in market conditions and the production costs of the agricultural products. The rules for the legal recognition of producer organisations should be streamlined. Producer organisations and their associations should be strengthened by allowing member states to grant them more financial support through CAP sectoral interventions. During trilogue discussions involving the European Parliament, the Commission and the Council of Ministers, a number of amendments to the proposed CMO regulations were tabled.
The Council suggested a series of amendments clarifying who is covered by the obligation for written contracts, with the aim of granting more flexibility to member states.
In addition, the Council proposed that:
Farmers would be able to trigger the revision clause for long-term contracts after 12 months, instead of the six months proposed by the Commission.Any mediation mechanisms should be voluntary, meaning that it would be up to the member states to decide whether to establish them. There would be a transition period of two years before the CMO regulations would come into force, compared with the 18 months provided by the proposal.However, the main sticking point in the trilogue discussions centred on whether co-ops would get a temporary derogation or an exemption from the requirement to provide mandatory contracts to milk suppliers.
Since the talks ended without agreement before Christmas, and the end of the Danish presidency, finding a compromise solution to the CMO question is now a matter for the Cypriots.
CMO proposals offer farmers great protection, say supporters
Those who support the changes included in the Common Market Organisation (CMO) draft regulations argue that the measures will strengthen the position of dairy farmers in the food chain.
They maintain that the proposed CMO contracts will provide greater protection to all farmers.
Those who support the CMO changes contend that co-ops are looking to retain the present situation where milk payments are continually two to six weeks in arrears of delivery.
Those who agree with the broad thrust of the CMO changes point out that co-ops can seek a derogation from the new law provided that they operate their contractual arrangements with suppliers in a manner which achieves the same results as the proposed legislation.
However, the co-ops have sought an exemption rather than a derogation from the CMO regulations.
“The co-ops and the farm organisations, together with the Department of Agriculture, should come together to bring forward new rules and template contracts for milk supply including price determination and the payment of milk under the new legislation in order to justify co-ops enjoying a derogation from the central thrust of the EU legislation,” one CMO supporter told the Irish Farmers Journal.
Milk pricing and contract length spark co-op objections
Co-operatives have “fundamental objections” to the CMO proposals, the representative body ICOS has stated.
ICOS chief executive TJ Flanagan said co-op concerns regarding the proposed CMO regulations centred on the length of the contracts proposed and the milk pricing measures.
“The duration is too short – effectively six months – this is way too short a contract for either a farmer or a co-op to base investment decisions,” said Flanagan.
“And, secondly, the specific requirement in the proposal that the milk pricing decision would be taken away from elected farmer directors and instead be calculated with reference to external indicators. This would not be in the farmers’ interests,” he maintained.
“The co-op model, whereby elected farmers meet monthly to get every last cent possible out of the market, while protecting the long-term stability of the co-op, is the one which has been in place for well over a century, and it has served farmers very well,” he argued.
“We’re not looking for anything particularly dramatic. The draft regulations attempt to provide for a derogation for co-ops that have in place contracts or milk supply agreements.
“We just want to make sure that the version that’s finally agreed is workable and respects the governance structures that are in place here and have stood the test of time,” Flanagan said.
“We appreciate that the commissioner [Christophe Hansen] was trying to solve problems in other sectors with this general contract proposal, but he’s trying to correct a problem that does not arise in the Irish dairy sector, and, instead, he risks damaging the one sector that actually delivers a wide-scale sustainable living for family farms,” he added.
Moves by European Commissioner for Agriculture Christophe Hansen to introduce mandatory supply contracts for farmers and other food producers have proven surprisingly divisive at EU level.
The proposed Common Market Organisation (CMO) regulations aim to “strengthen farmers’ position in the agri-food supply chain” and to foster “a higher degree of trust” between producers and processors, the Commission has claimed.
The move to introduce the CMO regulations was a response by the Commission to the widespread protests by farmers across the EU in 2024.
“Fairness for farmers is a key priority. Decent income, fair prices, stronger bargaining position in the food chain and better protections,” said Commission president Ursula von der Leyen at the launch of the CMO proposals in late 2024.
“That is why, as one of the first measures of this mandate, I am proud to announce proposals that will strengthen their competitive position.”
However, the initiative has prompted dissension and pushback from co-operatives right across the EU – and particularly those operating in the dairy sector.
But what are the main changes included in the draft regulations which were tabled by the Commission and voted through by the European Parliament?
Commission proposals
The Commission has proposed that:
Written contracts between farmers and buyers of produce should be a mandatory obligation.A minimum duration for contracts should be set at just six months.A revision clause should be included in long-term contracts, to better protect farmers and to ensure they are not locked into unfavourable terms.The establishment of mediation mechanisms between farmers and their buyers should be mandatory.Product prices should be set by combining objective indicators or using methods of calculation that are easily understandable. Price calculation methods should also be capable of reflecting changes in market conditions and the production costs of the agricultural products. The rules for the legal recognition of producer organisations should be streamlined. Producer organisations and their associations should be strengthened by allowing member states to grant them more financial support through CAP sectoral interventions. During trilogue discussions involving the European Parliament, the Commission and the Council of Ministers, a number of amendments to the proposed CMO regulations were tabled.
The Council suggested a series of amendments clarifying who is covered by the obligation for written contracts, with the aim of granting more flexibility to member states.
In addition, the Council proposed that:
Farmers would be able to trigger the revision clause for long-term contracts after 12 months, instead of the six months proposed by the Commission.Any mediation mechanisms should be voluntary, meaning that it would be up to the member states to decide whether to establish them. There would be a transition period of two years before the CMO regulations would come into force, compared with the 18 months provided by the proposal.However, the main sticking point in the trilogue discussions centred on whether co-ops would get a temporary derogation or an exemption from the requirement to provide mandatory contracts to milk suppliers.
Since the talks ended without agreement before Christmas, and the end of the Danish presidency, finding a compromise solution to the CMO question is now a matter for the Cypriots.
CMO proposals offer farmers great protection, say supporters
Those who support the changes included in the Common Market Organisation (CMO) draft regulations argue that the measures will strengthen the position of dairy farmers in the food chain.
They maintain that the proposed CMO contracts will provide greater protection to all farmers.
Those who support the CMO changes contend that co-ops are looking to retain the present situation where milk payments are continually two to six weeks in arrears of delivery.
Those who agree with the broad thrust of the CMO changes point out that co-ops can seek a derogation from the new law provided that they operate their contractual arrangements with suppliers in a manner which achieves the same results as the proposed legislation.
However, the co-ops have sought an exemption rather than a derogation from the CMO regulations.
“The co-ops and the farm organisations, together with the Department of Agriculture, should come together to bring forward new rules and template contracts for milk supply including price determination and the payment of milk under the new legislation in order to justify co-ops enjoying a derogation from the central thrust of the EU legislation,” one CMO supporter told the Irish Farmers Journal.
Milk pricing and contract length spark co-op objections
Co-operatives have “fundamental objections” to the CMO proposals, the representative body ICOS has stated.
ICOS chief executive TJ Flanagan said co-op concerns regarding the proposed CMO regulations centred on the length of the contracts proposed and the milk pricing measures.
“The duration is too short – effectively six months – this is way too short a contract for either a farmer or a co-op to base investment decisions,” said Flanagan.
“And, secondly, the specific requirement in the proposal that the milk pricing decision would be taken away from elected farmer directors and instead be calculated with reference to external indicators. This would not be in the farmers’ interests,” he maintained.
“The co-op model, whereby elected farmers meet monthly to get every last cent possible out of the market, while protecting the long-term stability of the co-op, is the one which has been in place for well over a century, and it has served farmers very well,” he argued.
“We’re not looking for anything particularly dramatic. The draft regulations attempt to provide for a derogation for co-ops that have in place contracts or milk supply agreements.
“We just want to make sure that the version that’s finally agreed is workable and respects the governance structures that are in place here and have stood the test of time,” Flanagan said.
“We appreciate that the commissioner [Christophe Hansen] was trying to solve problems in other sectors with this general contract proposal, but he’s trying to correct a problem that does not arise in the Irish dairy sector, and, instead, he risks damaging the one sector that actually delivers a wide-scale sustainable living for family farms,” he added.
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