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Price transmission in the dairy supply chain

DG AGRI’s Milk Market Observatory (MMO) is now proving its worth as a source of up-to-date data on milk and dairy product market developments. It is also an excellent source for historical time-series statistics which allow us to see patterns in the data and to develop hypotheses about the behaviour of actors in the food chain.
The chart below taken from the MMO shows the evolution of two indicators of producer prices for raw milk. One is the weighted average price that EU farmers received for raw milk at real fat and protein content (the ‘producer price’). The other is a hypothetical price, the farmgate milk price equivalent (FMPE), which is the price processors would be expected to pay based on the going market prices for butter and skimmed milk powder after deducting an average processing cost.… Read the rest

Competition issues in the single CMO regulation

Recent volatility in food markets together with the perception that price changes are transmitted differently at different stages of the food chain have renewed focus on issues of market power and the limited bargaining strength of farmers compared to other actors in the food chain. European and national competition authorities have increasingly monitored the functioning of the food supply chain, enforcing competition rules where necessary.
Strengthening the role of producers was one of the objectives of the recently-revised single Common Market Organisation Regulation (EU) No 1308/2013. Producer organisations, associations and interbranch organisation can now be recognised for all agricultural sectors and not just in fruit and vegetable production.… Read the rest

Did we really need the Milk Package?

On 25 September last, the Commission organised a dairy conference in Brussels with 400 stakeholders to discuss the evolution of the EU dairy sector after the end of dairy quotas at the end of March 2015. In his opening speech, Commissioner Ciolos noted that the conference was taking place in a favourable context in terms of the milk market but raised the question whether the market management toolbox now available under the CAP post-2013 proposals is sufficient to enable the sector to adequately anticipate and react to crises in the future.
Commissioner Ciolos referred back to the 2009 milk crisis which led to the establishment of the High Level Expert Group on Milk and ultimately to the introduction of the Milk Package in 2012.… Read the rest