IFA Seminar on Producer Organisations

Background
• Commission recognised that there is not sufficient regulation to give producers adequate protection when dealings with large processors
• Producer Organisations and Association of Producer Organisations

(APOs) introduced in a range of regulations and applied to various sectors in the agricultural market to include dairy, beef, olives, horticulture,
• PO’s give focus to small groups of producers to work together
• gives the possibility of entering into contracts for supply which as individuals they would not have been able to do

Steps required to set up a Beef Producer Organisation
• SI 49/2016 essentially mirrors the language of the Regulation1308/2013

• Article 152 of the Regulation provides that member states may recognise

PO’s which are constituted and controlled in accordance with Article 153.
• PO are to be formed on the initiative of the initiative of the producers.
• POs must pursue a specific aim and at least one of 11 objectives – none of which would be an issue in the Irish context.
• In broad terms these include:
• Planed production and concentration of supply and the placing on the market of the products produced by its members including through direct marketing;
• Promoting technical/research/marketing/environmental and sustainability initiatives in the beef sector.

Company CLG – Co Op
• There are minimum terms that required in the POs company constitution and/or co-op rules.
• Can require a member to supply a minimum amount of produce to the PO

• Standard Rules/Constitution of Company/ Co op cover many of the requirements for a PO

Must be equal votes for all menbers

Competition law
• Exemption from Competition law
• Not absolute
• Strong support for this in the Endives case

APO’s
• The Regulations also allow for Association of Producer Organisations which is where a group of POs can come together under an umbrella.

• Can allow a group of smaller PO’s to come together to share recourses and out source admin/marketing
• Also allows larger PO’s work together and again out source not production activities

Outsourcing of admin/support roles
• Outsourcing of the activities of a PO (other than production) to a separate entity is allowed
• Allows members get on with what they are best at
• Can bring in other expertise
• Needs resources

Member State – additional powers
• To make binding for a limited period some of the agreements or concerted practices on others who do not belong to the organisation;
• Require non-member to pay a levy or compulsory contribution to the PO.
• Impose contractual relations on delivery of products by a producer to a processor or distributor.

Issues

• No strict obligation on members to sell all produce through PO
• Difficulty of keeping all members together and not dealing separately with processor
• Administrative issues
• Small niche PO does not have resources or strength to take on processors
• Larger PO needs substantial resources to take advantage of PO benefits – admin costs and expertise
• Need to offer more than membership of PO

Next steps into a brave new world
• Producers have to want a PO to work
• PO needs support and resources to make them work
• Probable larger PO required to counter balance strength of processor/retailer

Summary
• In theory PO balances the negotiating position between producer and processor
• Competition law exemption is positive
• Practical reality of keeping everyone in PO is a serious impediment
• Administrative issues may be a burden for some PO’s
• PO needs to offer more than benefit of Regulation/SI
• Resources and expertise required for this

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