ACM barks but does not bite dairy companies

There is one thing that the ACM does not burn: the question of what a 'fair milk price' is. Perhaps understandably, because the answer to that question could easily be interpreted subjectively. In the meantime, this answer seems to be exactly what dairy farmers would most like to hear: how and when do they receive a fair and cost-covering milk price?

Explained and forwarded
Lactalis Leerdammer has since the pronounciation from September last year, a way to meet the objections of the ACM was sought. Contact was made about this of course. Lactalis also requested and received a postponement from the ACM to design a different milk price system in consultation with the suppliers. Supplier organisation LVLC, which submitted the old and unfair system to the ACM has raised the issue, does not seem to have been involved much. However, the Leerdammer suppliers' sounding board group was spoken to, although they did not necessarily have to agree. During the last round of spring meetings, the new system was further explained and then sent to the suppliers. Since this week, it has been clear that the ACM has agreed to it. The penalty payment order of over €1 million can therefore also be taken off the table.

Market conformity
The system roughly means that the milk price is based for 80% on the (change in the) guaranteed price of FrieslandCampina - which in itself is already a 'price basket' - and for 20% on the average European milk price, supplemented with corrections for, among other things, the performance of the own company. This should demonstrate a form of market conformity. At least that is how it was explained to the suppliers. Lactalis Leerdammer has not yet provided an official explanation.

The above-mentioned 2 matters: explanation of the formation of the milk price and informing all suppliers about it are decisive matters. Consent of all suppliers is not required. Choosing a different buyer of the milk is also an option, as the ACM indicates.

ACM outlines script
This outcome essentially also outlines the script for other private processors and their suppliers. It may be expected that the ACM ruling will also be indicative for the OHP Disputes Committee. the case between Vreugdenhil Dairy Foods and a supplier. There too, a lack of transparency was noted and clarification is requested.

Whether this will put an end to the discussion between farmers and processors about the establishment and level of the milk price is very questionable. The experience that parties in France have gained with legislation on alleged unfair trade practices suggests that it does not really change much, except for the procedure that must be followed when establishing the milk price.

Tune in, but not too much
And of course, it should not deviate too much from what is considered fair at other companies, unless there are exceptional circumstances. But too much coordination is also not allowed, because then there is no more competition. And a competition authority cannot approve that either.