Peter Dawson, from Dairy UK, presents the regulatory context of the dairy industry to the Dairy2020 project.

1. The voice of the dairy industry

2. WTO
• Negotiations stalled
• Current offer
– Limits on domestic support
• Will not affect EU expenditure
– Tariff cuts
• Probably not materially affect EU dairy market
– Abolition of export refunds
• EU proposal to abolish by 2013 difficult to repudiate
• Overall effect: EU market exposed to world price trends

3. CAP Reform: General
• Underlying direction of policy
– Removal of market support regimes
– Replacement with decoupled direct payments
– Payments increasingly linked to provision of
public goods
– Shift of funds to Rural Development
– Tighter budgetary constraints

4. CAP Reform: Dairy
Mid Term review 2003
• Cuts in intervention prices
• Compensatory direct payments integrated into
single farm payment
Health Check 2008
• Allowing the quota regime to lapse in March 2015
• Phased quota increases prior to that date

5. CAP Reform: Current Round
• Evolution of existing policy
– Refinement of single payment
• Addition of ‘greening criteria’
• Support for areas
– Specific constraints
– Particular socio/economic importance
• Capping
• Support for small farms
• Targeting at active farmers
• Market measures
– Retention of a safety net
– Support for risk management tools
• Rural Development
– New themes

6. CAP Reform: Outcome
• Less support for UK farmers
• More complexity
• Greater obligations
• Quota abolition to proceed
– More milk in certain regions of the EU
• Dairy still exposed to global price
trends

7. Dairy Package: Commission proposal
• Primary objective to improve bargaining position of
dairy farmers
• Producer Organisations
– New model for collective action by farmers
– Market share exemption from competition law
• Contracts
– Option for member states to regulate
– Content left to negotiation
• Inter-Professional Organisations
– Undertake variety of activities for the sector

8. Dairy Package: European Parliament
• Producer Organisations
– Larger exemption from competition law
– Lower threshold for intervention by national competition
authorities
• Contracts
– Mandatory requirement for Member States to regulate
– Requirement for fixed annual prices
– Greater prescription on content
• Inter-Professional Organisations
– Greater powers

9. Dairy Package: Outcome
• Producer organisations could
transform supply chain relationships
– But face significant transitional issues
• Contract regulation
– Greater price predictability at expense of
instability in relationships ?

10. Grocery Adjudicator
• Resolve disputes under the Grocery Supply
Code of Practice
• Undertake investigations
• Threat of reputational damage
• Impact on commercial relations uncertain

11. Nutrition and Health Claims Regulation
• Regulation will remain
• Places significant hurdles on the industry in
marketing of dairy products on basis of established
science
• Nutrient profiles will impose further restrictions
• Dairy unable to match research resources of food
processing multi-nationals

12. Food Information Regulation
• Sets requirements for food labelling
– Declaration of saturated fat content
mandatory
– Commission to review treatments of trans
fats

13. Carbon Targets
• Govt carbon budgets
– Greenhouse gas action plan
• Delivered through Dairy Roadmap
– Climate Change Agreements
• Much more challenging targets

14. Energy Generation
• EU ETS
– Full purchase of carbon allowances by energy
generators beginning 2013
• Electricity market reform
– Carbon price support
• Renewable energy support mechanisms
– Renewable obligation
– Renewable heat incentive
– Feed-in tariffs

15. Farm Issues
• Farm Environmental Regulation
– Review of NVZs
– Water Framework Directive
– IPPC
• Cloning/GM
– EU may ban cloning and impose a requirement
for traceability on progency
– EU approach fundamentally restrictive
• Animal Disease Control
• Planning Regulation

16. Regulators and Regulation
• EU remain dominant in agriculture and
food law
– Legislative process slower and less easy
to influence
– Review of existing regulation more
difficult
• Further devolution in the UK
• New partnership approach by Defra