2024-07-22 14:11:05
The project proposes to establish regulations that limit the ability of milk buyers and producers to freely agree on milk purchase prices. The aim is also to establish the obligation for milk buyers to publicly announce the applicable milk purchase prices in advance.
“Basically, the draft law aims to create a situation where all milk buyers would buy milk at the same prices, thus eliminating incentives to compete for both milk buyers and milk producers themselves,” LPK stated this position to state institutions.
In its letter, the confederation criticizes the provisions and process written in the project. In LPK’s opinion, this is one of the most striking examples of “legal nihilism”, when short-term pre-election goals overshadow not only legal values, but also threaten important industrial sectors.
Industrialists drew attention to the fact that the draft law aims to transfer to milk buyers the function of the state to protect producers from potentially unfavorable market fluctuations.
“Such aspirations have nothing to do with the goal of the Milk Law to ensure the “fairness” of relations between milk producers and buyers, nor with the generally mandatory goals of protecting fair competition, ensuring a fair balance of interests and the proportionality of market intervention,” the confederation’s letter asserts.
Kazys Starkevičius, chairman of the Seimas Economic Committee, has previously hinted that the aim will be to include not only processors and manufacturers, but also traders in the regulatory sphere.
However, the trade chain is not included in the project, which the Association of Lithuanian Agricultural Companies considers to be an essential gap in the project. The general director of the association, Jonas Sviderskis, notes that the price regulation proposed in the draft law for small, medium and large dairy farms will unequivocally negatively affect mixed farms specializing in milk production, which are already on the verge of extinction.
Egidijus Simonis, head of the Pieno centras association, also warns about the negative consequences of the law. According to him, interfering in the market can destroy the balance of the milk market, promote the import of raw milk, and provoke the withdrawal of dairy farms from commercial production.
So far, the drafters of the law have not approached the state institutions that can submit conclusions. However, the Competition Council responded to the industrialists’ letter and addressed the project organizers, drawing their attention to participate in the coordination procedure if the project is decided to be considered officially.
The Competition Council has not yet presented a detailed position on the project, but according to its competence, drew the attention of the drafters of the document that its provisions pose the risk of restricting competition and may conflict with the requirements of EU law.
“Previously, the Competition Council has repeatedly stated the position that regulation of milk purchase prices and setting the obligation to publicly announce these prices for milk buyers can distort competition in the market,” the council’s letter states.
In April, the draft law providing for the regulation of the purchase price of milk was transferred to the Seimas Economic Committee for improvement.
The draft law on the prevention of unfair actions of economic entities buying and selling raw milk proposes to establish the basic principles of milk pricing and limit the application of unfair practices when concluding contracts for the purchase or sale of milk.
This law would prohibit buyers from paying a lower average milk purchase price than the average milk purchase price paid when buying milk from a recognized agricultural cooperative or producer organization. Buyers would also be prohibited from unilaterally changing the terms of the contract, paying premiums or supplements exceeding 20 percent. milk prices, reduce milk prices more than every two consecutive milk supply periods.
Such a procedure would not apply to milk purchase and sale contracts when they are concluded by cooperatives that have their own rules for buying milk from their members.
According to the Ministry of Agriculture, such an arrangement is necessary because Lithuanian milk producers are relatively small, so an individual milk seller does not have much bargaining power, at that time an oligopolistic structure is visible in the milk processing sector – 5 groups of processing companies process about 90%. of all milk produced in the country.
At the end of March, the chairman of the Agricultural Council Ignas Hofmanas and the president of the Lithuanian Milk Producers Association Jonas Vilionis said that if the problems of dairy farms are not solved, the farmers may renew the protests that took place in January. After the meeting with the Government, they claimed that the problems of the milk sector are not being solved. At that time, the Minister of Agriculture K. Navickas said that this law would solve these problems.
2024-07-22 14:11:05