Ms Alison Graham:

The relationship between a co-op and its members is not one simply of a buyer and supplier because the farmer is, in part, an owner of the co-operative business so, legally speaking, it is questionable whether there is a transfer of ownership. This is a special and unique relationship that has been recognised in the legislation of many nations relating to unfair trading practices in the various EU member states. It is included in national legislation in Italy and France. We would like to see similar recognition included within the EU directive.

I mentioned one area where the ICOS recognised a potential problem in the current draft proposed directive about the payment terms within dairy co-operatives. This relates to the specific nature of the dairy co-operatives sector. To put it simply and quickly, a dairy farmer receives a monthly milk cheque. The price for that milk is decided by the elected co-operative board in the middle of the month for the preceding month's supply. This week, for example, the dairy boards are meeting and setting the price for September's milk. This means milk that was supplied in the first two weeks of September, under the draft EU directive the Commission is proposing, would be outside the 30-day deadline. However, the wording that has been introduced by the Council directive makes allowance for the particular nature of the dairy sector because normally, in the course of a supply agreement in many other sectors, an invoice would be provided by the supplier at the end of a month for the produce which has been supplied.

This does not take place in the dairy sector because the processor must do an analysis of the milk's content. The processor provides a receipt recording the volume, the percentage of fats and the percentage of protein, which is the basis of the milk price, as well as an overall analysis of the milk's quality. Where no invoice is provided by the supplier to the co-operative, the co-operative provides the invoice. In these cases the 30 day countdown begins on the date of delivery of the milk, which would put milk delivered in the first two weeks of the month outside the 30 day deadline. We favour the wording Ireland is introducing at the Council because it makes an allowance for cases where an invoice is not provided by the supplier but by the buyer. This allows for the 30 day timeline to begin at the end of the month long delivery period during the course of the supply agreement.

The 70 day rule and the four-move penalty were mentioned. There is no good reason a restriction is placed on the number of movements, or on movement within 70 days before cattle are sent to a slaughter house. This rule is in the scheme purely to distort trade and to stifle competition. Meat factories do not want to be bidding against each other at a mart but would prefer cattle to be sent directly to the processors so that they can set the price rather than increasing the prices they would have to pay for cattle, which would happen if they bid against each other.

There was a question on the liquid milk market. This is a highly competitive sector in Ireland and retailers can take advantage of that. If we saw higher standards applied to all suppliers with regard to what is acceptable within contracts, and the prohibition of certain unfair trading practices for all suppliers, it would have advantages for co-operatives in terms of what they get for their contracts in the liquid milk market.