"This legislation will strengthen the bargaining power of dairy farmers. Producer organisations should help farmers to organise themselves better and strengthen their position in the supply chain, especially in Member States where a system of co-operatives is limited or even non-existent, so that they can achieve the best possible price for their milk", said Parliament's rapporteur James Nicholson (ECR, UK).

The new regulation, already provisionally agreed with the Council, was approved at the first reading with 574 votes in favour, 97 against and 18 abstentions.

More bargaining power but fair competition

To ensure fair competition, the volume of raw milk covered by negotiations between producers' organisation and processors or collectors may not exceed 3.5% of total EU output. Nor may it exceed either 33% of overall national production or 45% in states where total production is below 500,000 tonnes.

Compulsory contracts must state prices

Member States may continue to decide whether or not to impose contracts covering milk delivery from farmers to collectors or processors for their territory.

If made compulsory, these contracts will have to be drawn up before delivery and must state the price, payments periods and arrangements for collecting and delivering the milk.

Member States may also stipulate a minimum duration for these contracts of at least six months and MEPs strongly recommend that they do so.

Milk from less-favoured areas

To ensure that dairy farmers in less-favoured areas also benefit from the new arrangements, MEPs asked the Commission to produce two reports assessing their situation, one by July 2014 and the other by the end of 2018.

Quality cheese supply management

To improve the working of the market for cheeses registered under a protected designation of origin (PDO) or protected geographical indication (PGI) and to improve their quality, MEPs inserted a provision for a supply management system, which Member States may establish provided that it in no way harms competition or leads to small cheese producers being adversely affected.

Any proposal for a supply management system must be backed by at least two thirds of those delivering at least two thirds of the milk destined for the production of such quality cheeses.

Next Steps

To enter into force, the new regulation still needs to be formally endorsed by the Council. It will apply until the end of June 2020.

National Farmers' Union - UK

Commenting on the proposals the NFU has said that the package does not go far enough - as it fails to guarantee minimum terms in contracts across the European Single Market.

Mansel Raymond, NFU dairy board chairman and Copa-Cogeca milk committee vice chairman, said: “The text of the Dairy Package establishes clear and sensible rules for price determination in milk contracts for farmers supplying a dairy other than a co-op. However, these explicit provisions for minimum terms in contracts are left to member states to choose to implement.

“In the UK we know farmers are adversely affected by poor contracts. As an example, it’s quite common for a contract to have 12 or more months’ notice requirement to leave, yet the price the farmer is paid can be changed at will by the processor without notice.

"“This isn’t a contract it’s exploitation."