Ms Alison Graham:

I thank the committee for the invitation to appear. I will try to be brief and not repeat, to any great extent, the good points already made by Mr. McCormack and Mr. Healy.

The Irish Co-operative Organisation Society, ICOS, very much welcomes the EU initiative to tackle UTPs in the food supply chain. Farmer-owned co-operatives play an important role in that chain. They integrate the roles of the producer, processor, and marketer in order to add value and increase the economic weight of farmers. ICOS supports action which will further protect farmers and their co-operatives and create a fairer and more equitable food supply chain. We wholly support the aims of the proposed directive, which seeks to prohibit certain UTPs across the EU. Many of these are practices to which Irish co-operatives are still continuously subject in Ireland and in EU export markets.

ICOS equally supports the proposal to establish an independent regulator in each EU member state to act upon anonymous complaints and address abuses through the use of sanctions, which is greatly necessary in our own approach. With many Irish co-operatives exporting to other EU countries and beyond, the current landscape of varied national legislation and mechanisms to address UTPs is a cause for concern. We have found that the status quoprovides inadequate enforcement and is contributing to a fragmented Internal Market. These features of the proposal are vital in order to ensure that the directive addresses the pitfalls of the varied and voluntary EU approach.

I wish to highlight three aspects of the draft directive about which we are particularly concerned and which we feel need to be addressed in the final agreed text of the directive in order to protect the functioning of farmer-owned co-operatives and enhance the effectiveness of the directive overall. First, the directive must protect co-operatives and respect their functioning. Farmer-owned co-operatives are the most effective way of increasing the bargaining power of farmers, which is the ultimate goal of this initiative. The directive must take account of the unique relationship between a co-operative and its members, which is not simply one of buyer and supplier but, rather, one of member, owner and decision maker. This is why we are very supportive of the proposed wording in the Council's draft directive regarding payment terms, which will protect the current structures within the dairy co-operative sector in Ireland. It introduces wording relating to instances where a producer does not provide an invoice to his buyer, rather - as in our dairy sector - the co-operative provides an invoice to the supplier with an analysis of the delivered milk’s contents. The new wording would allow for the continuation of the market-oriented and democratic price-setting structures in our dairy co-operatives. This is vital and greatly welcomed.

Second, we wish to emphasise that UTPs are unfair and damaging to all businesses, regardless of size. If a practice is recognised within the directive as being unfair and contrary to good commercial conduct, it should be prohibited in all cases. A total of 90% of Irish co-operatives are small to medium enterprises, SMEs. The remaining 10%, however, represent the vast majority of the Irish dairy production pool. In order to ensure protection for the vast majority of Irish dairy farmers, it is necessary to include non-SME suppliers within the scope of the directive. In addition, approximately 90% of retailers in the EU are SMEs and are excluded from the current scope of the directive. The size of businesses should not entitle buyers to use UTPs.

ICOS is also concerned about the impact of this scope on the competitiveness of SME co-ops. There is little incentive for a buyer to choose an SME supplier over its non-SME neighbour if that buyer knows that the latter has more flexibility regarding payment terms and that it will be possible to impose additional fees in contracts with such a supplier. In order to create a truly level playing field for farmers, co-operatives and their downstream buyers and prevent competition distortions, ICOS feels strongly that the legislation must be applicable to all businesses.

Lastly, but by no means least, the Irish Co-operative Organisation Society, ICOS has long highlighted the unfair trading practices Irish farmers are subject to by meat processors in Ireland, and in particular the penalties imposed by the quality payment system on more than four movements between farms prior to slaughter or movement within the last 70 days before slaughter, as Mr. McCormack has already mentioned. These issues are not addressed in the list of unfair trading practices, UTPs, proposed by the Commission's draft directive. We call for the list of prohibited UTPs to be extended to cover these practices that are subverting the free trade of factory-fed cattle in Ireland, stifling competition and hugely damaging the impact on prices of the entire livestock industry. ICOS would like to see a provision that is already included in the European Parliament report within the list of prohibited UTPs that relate to the unilateral imposition of quality standards that are not based on current legislation, quality schemes, science or current practices, and which have a distorting effect on free trade.

I welcome any questions that committee members might have.