Coping with market power: dairy farmers’ interest in Producers’: Organizations and contracts

In 2015 the quota in the dairy sector will no longer be prolonged, as one of the measures to further liberalize the dairy market. To support farmers in this more volatile market and to increase their negotiation power, the EU has proposed several measures in a Dairy Package, amongst which the possibility to form producers’ organizations (POs) and to negotiate contracts. This paper investigates whether dairy farmers are interested in these POs and contracts and which elements are to be considered. We focus on the case study Flanders as an example of an intensive dairy producing and processing region. A mixed method design, combining qualitative research and choice experiments, was followed. The paper indicates that there is generally a lack of awareness amongst dairy farmers concerning both the concept of POs and contracts. Dairy farmers are in favor of POs to negotiate market access, as processors are against price negotiations. This contradicts the EU objective of empowering the dairy farmers. Dairy farmers are less interested in contracts and prefer long term relationships with their buyers.