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Contracts A Must For The Dairy Industry

13 January 2011

FRANCE - The decrees mandating the contracts between producers and buyers in the dairy industry have been published in the Official Gazette, under the law of modernisation of agriculture and fisheries (LMAP) of July 27, 2010.

This means that all milk producers and buyers must have a contractual relationship in place. Written formalisation of trade relations between producers and first buyers is now the law.

It aims to protect farmers by giving them a long term stable market (they will be under contract for a minimum of five years for milk), but it will also allow processors and distributors to be sure of their supplies.

The contracts will be offered by buyers to producers. They will include such commitments on the volumes of agricultural products and on specific terms of pricing throughout the contract. The contracts will therefore also reduce price volatility. The State agencies and public institutions will monitor carefully the implementation of the contracts which come into effect from April 1 2011.

To protect producers, the LMAP also plans to establish a contract mediator charged with first-line intervention in disputes. A decree to that effect will be taken in the coming weeks.

The contract aims to strengthen the bargaining power of farmers and to restore a balance in the distribution of value-added chains in favour of producers, through price transparency and increased profit margins. These measures were taken from the draft regulation on contractual relations in the milk and milk products that the European Commission presented on 9 December.

This measure is complementary to the regulation of agricultural markets.



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