DII 'satisfied' Irish dairy model in line with new EU milk supply rules
Dairy Industry Ireland (DII) has said that Ireland's co-operative milk supply model is already in line with new EU rules on milk supply contracts.
Earlier this month, the Council of the EU and the European Parliament reached a provisional agreement to give farmers a "stronger negotiating position" in the food supply chain.
The council reached a provisional agreement with the parliament on an amendment of the regulation on the Common Market Organisation (CMO) for agricultural products.
The updated rules aim to support more balanced and resilient supply chains, including making written contracts a general rule and reinforcing producer organisations.
However, the new rules include a derogation for co-operatives, meaning no mandatory contracts are foreseen for farmers that are members of co-operatives.
This has been criticised by dairy farmer organisations, with the European Milk Board claiming that the new regulations "incorrectly assume that co-operative statutes already ensure sufficient transparency".
However, DII director Conor Mulvihill said that the derogation for co-operatives from the mandatory contract rules is "critical".
Mulvihill told Agriland: "We have worked extensively with our partners in the co-operative movement...the European Dairy Association and other European partners to ensure the regulatory burden on the Irish model is minimised.
"Because the newly agreed framework includes a critical derogation for dairy cooperatives and allows member states to opt out of certain rigid price-indicator requirements, we have successfully avoided a scenario where unnecessary red tape and additional costs are is forced upon our sector," Mulvihill claimed.
He said that, for independent milk purchasers, there will be some new administrative requirements to formalise written contracts.
"However, for the vast majority of Irish processing, which operates under the co-operative model, we are satisfied that our existing, democratically governed supply structures already meet these European standards without needing an additional, burdensome layer of bureaucracy," the DII director added.
"The Irish dairy sector is fundamentally different from many of our European and UK counterparts because it is built upon a farmer-owned cooperative model.
"In Ireland, the milk supplier and the processor are not opposing forces; the farmers own the processing capacity," Mulvihill said.
He added: "Our system is governed by democratically elected boards made up of the farmers themselves, which guarantees transparency, accountability, and fair value distribution.
Mulvihill claimed this structure "inherently protects the primary producer and provides a secure, long-term outlet for [farmers'] milk".
"This a level of protection that top-down legislation simply cannot replicate and would not be suitable for our farmer-led system.
He claimed that introducing "rigid, mandatory legislative contracts" into a "highly volatile" market risks "stripping away the flexibility both farmers and processors need to survive".
"Overly prescriptive contracts can force purchasers into inflexible pricing or volume commitments that don't reflect sudden global market shocks," Mulvihill added.
"This leads to market destabilisation, threatens a processor's ability to take on milk during peak seasonal flows, and ultimately jeopardises the farmer's security of outlet," he claimed.
