How far does the obligation to deliver to a dairy go?

Dairy farmers have a relationship or legal relationship with their dairy; the dairy processing organization that purchases, processes and markets the milk produced by dairy farming. How far does the relationship and the obligation to deliver to the dairy go?

As the dairy is a (private) company (a private factory), then the relationship is contained in a cooperation or supplier agreement. If the dairy processing organization is a cooperative association, the relationship is essentially embedded in the membership relationship between the dairy farmer and the factory.

Exclusive delivery obligation
Normally, the relationship between dairy farmer and factory stipulates that the dairy farmer is obliged to deliver all milk produced by his company to the factory (except that which is necessary for his own domestic use). However, on the other hand, this milk is actually purchased by the factory.

This not only offers the dairy farmer, but also the factory security. On the one hand, the dairy farmer is assured of the fact that his milk is being purchased and, at the same time, the factory is assured that sufficient milk is being supplied. This is to guarantee the continuity of the processing, production and sales process.

What if a dairy farmer does not comply with the agreed delivery obligation?
The delivery obligation does mean that a dairy farmer is prohibited from selling the milk to third parties without the factory's permission; even when this third party sets less high or different requirements for the production process and/or pays a better price for the milk. In the event of a violation of the delivery obligation, the factory can still enforce the milk, if necessary in court and on pain of a penalty.

In addition, compensation can be claimed, whether or not in combination with termination of the relationship. If the dairy farmer in question is a member of the cooperative, he can even be removed from membership. This is apparent from a decision of the court in Groningen (22 June 2016); after termination of the membership was found not to be legally valid, the dairy farmer was expelled from the membership. This is because he did not supply milk, which led to the loss of all kinds of claims and rights for the dairy farmer.

Delivery obligation formulation: tour of dairies
The dairy companies have formulated the delivery obligation included in the conditions in varying ways, although in the articles of association or delivery conditions it essentially always comes down to the same thing. For example, the articles of association of Cono Kaas stipulate that every member is obliged to deliver all milk from the healthy cows present on his farm to the cooperative (on Sundays that which is necessary for his own domestic use).

Rouveen's statutes stipulate that every member is obliged to supply the milk produced by the cows of his dairy farm (from 1 address, located in the working area of ​​the cooperative). FrieslandCampina's articles of association prescribe that members are obliged to supply all common milk produced in their company to the cooperative or to a third party to be designated by it.

DOC Kaas essentially prescribes the same. Royal Bel Leerdammer prescribes that livestock farmers must supply it with all milk produced on the farm. DeltaMilk's regulations also provide for this: every member is obliged to sell all milk from his healthy cows to her. In each case it is stipulated that it is prohibited to give the milk to third parties, to sell it or to have it sold.

Business has been leased, transferred or leased
What if a dairy farmer has leased his company, whether or not prompted by dissatisfaction with the cooperative's milk price that he believes is structurally too low? Some time ago, this question was submitted to the Interim Relief Judge in summary proceedings in the Assen District Court; a dairy farmer who had leased his company (cows, farm buildings and machines) to a third party, was held liable by his factory for compliance with his obligation to deliver, on pain of a penalty payment.

The dairy farmer has defended itself against this claim. He took the position that it is permitted to lease his company and that the milk (after leasing) is no longer produced 'in his company'. He is then no longer obliged to fulfill the delivery obligation, according to this dairy farmer.

No duty for tenant
The judge agrees with the dairy farmer: the cooperative's regulations do not mention anything about leasing, letting and/or business transfer. This means that the dairy farmers are allowed to lease his company without having to oblige the tenant to deliver the milk to 'his' cooperative.

The court also rejected the cooperative's claim that there was a sham construction without a real and serious lease. In short, according to this ruling, a dairy farmer can lease, transfer or rent out his business to a third party, without breach of the obligation to deliver.

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