13. 11.  78 Official  Journal  of the European  Communities No C 269/1 
II 
(Preparatory  Acts) 
ECONOMIC  AND  SOCIAL  COMMITTEE 
Opinion  on the proposals  for: 
— a Council  Regulation  amending  Regulation  (EEC)  No  804/68  on  the  common 
organization  of the market  in milk  and  milk  products 
— a Council  Regulation  relating  to the Northern  Ireland  Milk  Marketing  Board 
The text  referred  to the Committee  has  been  published  in Official  Journal  of the European 
Communities  No  C 13 of 17 January  1978,  pages  5 and  6. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 12 January  1978,  the Council  referred  the abovementioned  proposal  to the Economic  and 
Social  Committee  in accordance  with  Articles  47 and  198  of the  Treaty  establishing  the 
European  Economic  Community. 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its opinion  on the above  matter  at its 158th 
plenary  session,  held  in Brussels  on 26 and  27 April  1978. 
The full  text  of the opinion  is as follows: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the Treaty  establishing  the European 
Economic  Community  and  in particular  Articles  47 and 
1 98 thereof, 
Having  regard  to the request  made  by the Council  of the 
European  Communities  on 16  January  1978  for  the 
Economic  and  Social  Committee's  opinion, 
Having  regard  to the proposal  for a Council  Regulation 
laying  down  general  rules  for  milk  producers' 
organizations, 
Having  regard  to the decision  taken  by the Committee's 
chairman  on 18 January  1978,  instructing  the Section  for 
Agriculture  to draw  up an opinion  on the matter, 
Having  regard  to the urgency  procedure  provided  for in 
Articles  46 and  47 of the Rules  of Procedure, Having  regard  to the opinion  drawn  up by the Section  for 
Agriculture  at its meetings  on 6 and  19 April  1978, 
Having  regard  to the report  submitted  by the rapporteur, 
Mr Wick, 
Having  regard  to the  discussions  at its 158th  plenary 
session  held  on 26 and  27 April  1978  (meeting  of 26 April 
1978), 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
by 63 votes  to four,  with  18 abstentions: 
I. PRELIMINARY  REMARKS 
1. The  Committee  deplores  the Commission's  failure 
to submit  its proposals  until  just  before  the expiry  of the 
No C 269/2 Official  Journal  of the European  Communities 13. 11. 78 
transition  period.  It was  apparent  as long  ago  as the 
accession  negotiations  that  an examination  of the powers 
of the Milk  Marketing  Boards  was  necessary  to see how 
far they  were  in line  with  Community  law. 
2. The  Commission  makes  it a major  element  of its 
economic  case  that  liquid  milk  consumption  in the United 
Kingdom  is very  high  and  that  this  coincides  with 
Community  policy  in the milk  and  milk  products  sector, 
which  now  aims  to reduce  the high  public  costs  arising 
from  an application  of the  intervention  system  in 
particular  for butter  or skimmed-milk  powder  while  at the 
same  time  maintaining  a fair  standard  of living  for the 
farming  population. 
However,  a case  based  on liquid  milk  and not on the other 
milk  products  which  do not  qualify  for intervention  is 
unconvincing.  It might  conflict  with  the  aim  of the 
common  organization  of the  milk  market,  namely  to 
ensure  maximum  consumption  of all milk  and  milk 
products;  if this  purpose  is to be achieved,  all milk 
products  for human  consumption  must  be treated  alike 
under  the market  organization.  Statistics  show  that  some 
Member  States  with  market  organization  structures 
differing  from  those  of the  United  Kingdom  have  an 
equally  high  aggregate  consumption  of milk  and  milk 
products.  The  liquid-milk  distribution  system  of the 
United  Kingdom  undoubtedly  makes  a substantial 
contribution  to the high  level  of milk  sales  in that  country, 
and this  system  of distribution  should  therefore  be 
retained. 
3. The  Committee  doubts  whether  milk  producers' 
organizations  in the  proposed  form  would  improve 
collection  and marketing  in other  Member  States.  There  is 
too much  danger  that  they  would  seriously  jeopardize 
the existence  of the  present  systems  which  have  been 
developed  on a voluntary  basis. 
4. In  addition,  the  Commission's  proposals  raise  a 
number  of serious  competition-law  issues.  Producers' 
organizations  which  have  a monopoly  and  powers  to 
equalize  prices  must  be subject  to rules  to prevent 
competition  distortions  and any  threat  to trade  within  the 
Community.  However,  if these  rules  were  not observed 
throughout  the Community,  each  individual  sub-market 
might  clearly  shield  itself  against  the others  as a result. 
In the  long  run  this  would  be likely  to lead  to the 
disintegration  of the Community  milk  market. 
In the past,  arrangements  similar  to those  now  proposed 
had to be abolished  in a number  of Member  States  because 
they were  incompatible  with  Community  law.  The 
Committee  would  stress  its concern  to see  that  the 
measures  now  proposed  are consistent  with  the Treaty. 
5. Given  the  degree  of concentration  of the  United 
Kingdom  processing  industry,  which  in some  cases  is very considerable,  the Committee  feels  that  the aim  should  be 
to establish  rules  which  give  producers  a fair position  on 
the market.  These  rules  must  be applicable  anywhere  in 
the Community  where  the circumstances  are comparable. 
6. The  Committee  wonders  whether  instead  of a piece 
of Community-wide  legislation  a measure  aimed  simply  at 
bringing  the  Milk  Marketing  Boards  into  line  with 
Community  law  would  not be more  suitable.  The  object 
of such  a measure  should  be to preserve  the goods  in the 
present  arrangements  and  to revoke  those  of the rights  of 
the organizations  which  are an impediment  to trade  in the 
Community. 
7. Finally,  the  Committee  deplores  the  fact  that, 
although  alive  to the  difficulties  outlined  above,  the 
Commission  has  put  forward  such  an  incomplete 
proposal.  In the interest  of the Community  as a whole,  the 
Commission  should  not forget  that  one of its main  tasks  is 
to table  proposals  which  strike  a reasonable  balance 
between  the  interests  concerned.  The  present  proposal 
does  not do so. 
II. PROPOSAL  FOR  A  COUNCIL  REGULATION 
AMENDING  REGULATION  (EEC)  No  804/68  ON  THE 
COMMON  ORGANIZATION  OF THE  MARKET  IN MILK 
AND  MILK  PRODUCTS 
1. Specific  comments 
1.1. 
The criteria  to be applied  to the  authorization  of 
producers'  organizations,  particularly  in regard  to size, 
are not spelt  out.  Close  attention  needs  to be paid  in the 
authorization  of such  organizations  to the  rules  of 
competition  in view  of the extraordinary  powers  to be 
conferred  on them. 
To lay  down  certain  percentages  of milk  production 
which  must  be sold  as liquid  milk  or fresh  products  and  to 
grant  exclusive  rights  to organizations  on that  basis  does 
not appear  particularly  wise  in these  circumstances.  The 
Committee  also  points  out that  in several  Member  States 
large  quantities  of long-life  milk  and  milk  products 
(keeping  up to six months)  are produced  for marketing  in 
other  areas  and  even  across  national  boundaries  in a 
different  Member  State.  Consumers  and  distributors  are 
used  to seeing  these  products  in the dairies'  range  and 
having  a wide  choice  of freely  competing  products.  From 
this point  of view  it would  be undesirable  to limit  the 
operations  of producers'  organizations  to fresh  liquid 
milk  and  fresh  manufactured  products  as under  the 
proposal. 
13. 11. 78 Official  Journal  of the European  Communities No C 269/3 
In connection  with  Article  25 (1) mention  should  also  be 
made  of the letter  to the British  Government  which  is 
reproduced  in the document  after  the draft  regulations. 
The letter  calls  upon  the government  to keep  certain 
commitments  and  indicates  the  terms  on which  the 
Commission  would  consider  an  application  for 
authorization  of the British  Boards  as milk  producers' 
organizations. In view  of the fact  that a group  of cooperative  creameries 
has been  in existence  in Northern  Ireland  for very  many 
years,  the Committee  recommends  that an impartial  study 
should  be undertaken  with  the objective  of appraising  the 
wider  benefits  which  could  accrue  to the Northern  Ireland 
economy  from  a restructuring  of the Northern  Ireland 
Milk  Marketing  Board  and  the cooperative  creameries. 
1.2. Article  25 (2) 
The reasons  for the choice  of the proportion  of 80 % are 
obscure. 
It is moreover  undeniable  that  the scheme  will  impose 
membership  on the  remaining  20%  of producers, 
contrary  to their  right  to free  exercise  of their  occupation. 
The Committee  also  doubts,  considering  the object  of the 
proposal  and  in the light  of Articles  39 et seq.  of the 
Treaty,  whether  the principle  of the proportionality  of 
ends and  means  has been  observed. 
The Committee  also  points  out that  the minimum  number 
of producers  required  to form  an organization  takes  no 
account  of how  big a share  of milk  production  in the area 
they account  for.  It is theoretically  possible  that  the 
required  80 % of producers  do not represent  even  50 % of 
milk production. 
1.3. Article  25 (3) 
It is the view  of the Committee  that  the proposed  general 
rules  for producers'  organizations  must  be drafted  so as to 
ensure  that  there  is no disruption  of the operation  of the 
common  milk  market  organization,  and,  in particular, 
no distortion  of competition  affecting  trade  between 
Member  States. 
III. PROPOSAL  FOR  A  COUNCIL  REGULATION 
RELATING  TO  THE  NORTHERN  IRELAND  MILK 
MARKETING  BOARD 
The Committee  is conscious  of the fact  that  the current 
political  situation  in Northern  Ireland  prevents  judgement 
of the proposal  solely  on economic  merit.  It is therefore 
unable  to comment  on the economic  case  for the proposal, 
although  it would  point  out  that  the  reasons  given 
contradict  the argument  used  in support  of the proposed 
new Article  25 of Regulation  (EEC)  No 804/68. 
The Committee  does  not share  the Commission's  view 
that the sole  aim of the proposal  is to avert  disturbances 
on the British  milk  market,  since,  given  the unity  of the 
common  market,  disturbances  could  also  be expected  in 
the Irish  Republic  or elsewhere  in the Community. IV. PROPOSAL  FOR  A COUNCIL  REGULATION  LAYING 
DOWN  GENERAL  RULES  FOR  MILK  PRODUCERS' 
ORGANIZATIONS 
The Committee  feels  it should  also  comment  on this 
proposal  in view  of the close  connection  between  it and 
the proposal  amending  Regulation  No 804/68  di&ussed 
in Chapter  II above. 
Article  1 (1) (a) 
The Committee  is surprised  that  the areas  for which 
producers'  organizations  may  be set up are restricted  to a 
single  national  territory.  This  restriction  will  set back  the 
cross-frontier  economic  and regional  integration  that  has 
already  been  achieved.  The proposal's  compatibility  with 
Community  law should  be scrutinized. 
Article  I (1) (c) 
The Committee  is astonished  at the  Commission's 
statement  that  the limit  on herd  size  of 150  cows  was 
based  solely  on United  Kingdom  data.  If there  is to be a 
limit  - and  the Committee  does  not necessarily  agree  that 
one is justified  - then  in this case  as in the others  data  from 
all the Community  must  be used  to calculate  it. 
Article  1 (2) and Article  2 (5) 
This provision  must  be seen  in relation  to the comments 
on the proposed  new  Article  25 (1) and to Article  2 (5) of 
the General  Rules.  Besides  its possible  adverse  effects 
on the  traditional  systems  in the  other  countries  of 
the Community,  this  provision  will  also  involve 
discrimination  against  the  other  Member  States' 
producers. 
Article  1 (3) (b) 
The reference  to Article  25 (1) of Regulation  (EEC)  No 
804/68  is wrongly  given  in some  versions  as Article  2(1). 
Article  3 (1) (b) 
It is essential  in any  circumstances  that  the activities  of 
producers'  organizations  be kept  strictly  separate  from 
No C 269/4 Official  Journal  of the European  Communities 13. 11. 78 
their  processing  and  manufacturing  undertakings  and 
their  marketing  of milk  and  dairy  products,  so that 
competition  with  existing  firms  is fair and on a purely 
market  economy  basis.  In conjunction  with  Article  3 (2) it 
also becomes  apparent  that,  purely  in terms  of their 
function  on the market,  producers'  organizations  would 
form  an intermediate  structure.  This  intermediate 
structure  could  be a source  of additional  costs  in the 
marketing  system,  which  would  ultimately  have  to be 
borne  by the producers  and/or  the consumers. 
Article  4 (1) 
The Committee  notes  that,  in the particular  conditions  of 
the United  Kingdom,  the activities  of the Boards  have 
reduced  costs.  However,  the Committee  would  point  out that the implementation  of the Commission's  proposals  in 
the other  countries  of the Community  where  producers 
would  like to set up Board-like  bodies  would  result  in high 
administrative  costs  for these  producers  who,  to start 
with,  would  not have  the basic  facilities  existing  in the 
United  Kingdom.  Furthermore,  there  is considerable 
doubt  as to the possibility  of keeping  a check  on the 
activities  of the producers'  organizations.  These  rules  also 
show  that  a number  of additional  provisions  will  be 
needed  to maintain  free  trade.  Such  provisions  are not 
necessary  under  the existing  market  organization. 
The Committee  notes  that  paragraph  (c) of this clause  is 
designed  to provide  a further  safeguard  to prevent  any 
undermining  of the existing  milk  market  organizations, 
but points  out that this particular  measure  will be effective 
only to the extent  that  producers  are aware  of the ruling 
intervention  price  equivalent  for processed  milk  products. 
Done  at Brussels,  26 April  1978. 
The Chairman 
of the  Economic  and  Social  Committee 
Basil  de FERRANTI 
ANNEX 
to the Economic  and  Social  Committee's  opinion 
Rejected  amendments 
The following  amendments  were  rejected  in the course  of the proceedings: 
Page  4, section  7 of the Section's  opinion 
Replace  by: 
'Finally  the Committee,  whilst  having  reservations  on the proposals,  appreciates  that  the Commission 
has recognized  the value  of the United  Kingdom  Milk  Marketing  Boards.  However,  the proposals  do 
not seem  to be quite  complete.  Only  if there  are adequate  safeguards  to avoid  distortion  of competition 
and ensure  equitable  intra-Community  trade  would  the Commission's  proposals  represent  a reasonable 
balance  between  the interests  concerned.' 
Reason 
The United  Kingdom  Milk  Marketing  Boards  provide  a valuable  link  in the marketing  chain  between  milk 
producers  and a highly  concentrated  consumption  of total  milk  and milk  products  which  is greater  than  in 
all but  one  of the other  Member  States.  In view  of the importance  which  should  be attached  to the 
maintenance  and  promotion  of consumption  in the milk  sector,  the proposals  should  ensure  that  the 
essential  functions  of these  Boards  are continued. 
In order  to meet  the concerns  of Community  producers,  processors  and  traders  operating  outside  the 
framework  of the Milk  Marketing  Board  system,  the proposals  should  ensure,  however,  that  the existing 
common  market  organization  for milk  is not undermined  and  conditions  of fair competition  and  trade  are 
upheld. 
13. 11.  78 Official  Journal  of the  European  Communities No C 269/5 
Voting 
For: 16, against:  44, abstentions:  15. 
Page  5, Article  25(2) 
Amend  the second  paragraph  to read: 
'It is moreover  undeniable  that  the proposed  measures  would  impose  membership  on the remaining 
20 % of producers.  Whilst  contrary  to the right  of those  producers  to free  exercise  of their  occupation, 
the Committee  notes  that  if the proposals  contribute  to the attainment  of the objectives  of Article  39 et 
seq. of the Treaty,  the principle  of proportionality  of ends  and  means  would  be observed.' 
Reason 
The degree  to which  the proposals  will  further  the achievement  of the objectives  of Article  39, and  having 
regard  to Article  40, determines  whether  the principle  of proportionality  is observed. 
Voting 
For: 16,  against:  37, abstentions:  19. 
The following  passage  of the Section's  opinion  was  replaced  by the text  of an 
meeting: 
'4. The  Section  therefore  wonders  why  measures  of the same  sort,  as 
moment,  are now  supposed  to be consistent  with  the Treaty.' 
Voting 
Nem.  con. 
The following  passage  of the Section's  opinion  was  deleted  in the course  of the proceedings: 
'5. The  present  proposals  are  both  incompatible  with  the  aims  of Community  policy  and  too 
far-reaching  for their  object,  namely  to preserve  the advantages  of existing  organizations  whilst 
satisfying  the need  to bring  them  into  line  with  Community  rules.' 
Voting 
For: 29, against:  24, abstentions:  24. 
Opinion  on the  proposal  for  a Council  Regulation  laying  down  a transitional  measure  for the 
Community  financing  of a consumer  subsidy  for  butter  referred  to in Regulation  (EEC) 
No 880/77 
The text  referred  to the  Committee  has  not  yet  been  published  in the  Official  Journal  of  the 
European  Communities. 
A. LEGAL  BASIS  FOR  THE  OPINION amendment  carried  by the 
are being  proposed  at the 
On 6 March  1978,  the  Council  referred  the  abovementioned  proposal  to the  Economic  and 
Social  Committee  in accordance  with  Articles  47 and  198  of the  Treaty  establishing  the 
European  Economic  Community.