The Irish Co-Operative Organisation Society (ICOS) has welcomed a derogation on dairy co-operatives under new EU rules for supply contracts.

Last week, 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 a targeted 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, dairy farmer organisations have said they "regretted" what they called "loopholes" in the proposed revisions to the rules, including the fact that no mandatory contracts are foreseen for farmers who are members of co-operatives.

According to the European Milk Board (EMB), this is because the new regulations "incorrectly assume that co-operative statutes already ensure sufficient transparency", the group claimed.

On the flip side, ICOS has said that making supply contracts mandatory for co-ops would have "added more red tape and bureaucracy where there is already a well-functioning model of supply, including existing milk supply agreements".

President of ICOS Edward Carr did say that he welcomed the agreement at EU level, including the proposed introduction of mandatory contracts in other situations.

Carr said the agreement "includes a recognition of the existing relationship" between dairy co-ops and their farmer suppliers.

He said: "We welcome the fact that this regulation give a derogation to co-operatives which already have a robust model of milk supply in place determined by democratically elected co-operative boards".

"We would not contemplate a situation where the commission would impose another layer of contract where the existing model is transparent and works well," the ICOS president added.

Carr said that Irish MEP Barry Cowen, who was one of the main MEPs working on the revisions to the rules, had pushed for the derogation for co-ops to be included, something Carr thanked Cowen for.

"We welcome the overall initiative by the European Commission to improve the position of the farmer in the food supply chain.

"And we hope that, when the agreement enters law, it will support all farmers while allowing co-operatives to continue functioning with transparency and accountability," Carr said.