Formal recognition for beef producer organisations
Formal recognition for producer organisations in the beef sector will be a historic breakthrough for Irish beef farmers, says Agriculture Minister Simon Coveney.
“For the first time in Ireland, they will have a legal framework allowing for negotiation directly with factories on price as a group.
"As we have seen from other sectors, POs can greatly help to rebalance the supply chain by strengthening the hand of producers who will now have a structure for negotiating collectively.”
Do producer organisations interfere with fair trading?
Article 101 of the Treaty on the functioning of the EU bans anti-competitive agreements, unless the agreements improve production or distribution, while allowing consumers a fair share of the resulting benefit.
In line with and to the extent provided by the relevant regulations, these rules apply to the agricultural sector, subject to specific derogations, including for the sale of olive oil, beef and veal, and arable crops.
Producer organisations and associations of producer organisations in these three sectors can jointly sell and set prices, volumes and other trade conditions for these products, if they create significant efficiencies through other joint activities (such as distribution, storage).
New rules introduced by the latest CAP Reform were specifically geared towards these three sectors.
What are the limits on the activities of producer organisations?
Farmers can engage in joint selling-activities in the arable crops, live animals for beef and veal production or olive oil sectors, if joint selling is carried out by producer organisations or associations of producer organisations formally recognised by national authorities.
The quantity jointly marketed by the organisations cannot exceed:
n 15% of the national market for beef and veal, and arable crops
n or 20% of the relevant market for olive oil.
The organisations should carry out other activities than joint selling, for example storage or distribution, and beef and veal producers could jointly promote their products in cases when they are aiming at creating a distinctive product.
These additional activities must significantly improve farmers’ competitiveness on the market (creating significant efficiencies).
How does that help the position of farmers in practice?
First, if farmers sell together volumes of up to 15% of national production for beef and veal and arable crops, and 20% of the relevant market for olive oil, they will represent as much of the demand as the largest buyers in the market.
Hence, they will have significantly increased their bargaining power and achieved a better balance vis-à-vis their buyers, compared to each selling separately.
Second, by carrying out supporting activities together through an organisation, farmers can get access to cheaper inputs (for example, through joint procurement of feed or fertilisers), can reduce costs for transport or distribution, or offer more flexible or more reliable supplies (for example through storage and/or distribution).
Ultimately, they may reduce their costs and improve their offers, meaning more competitiveness for farmers on the market.
Does the joint selling require any prior authorisation?
Farmers or their organisations need to check themselves whether the joint selling activity fulfils the above listed conditions.
However, when starting their joint-selling activities, the organisations have to notify without delay the competent authority appointed by their Member State.
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