French retailers, dairy farmers and processors are already trading statements on price transparency — a month before annual talks with suppliers open, due to conclude on 1 March.

The annual trade negotiations have not started yet, but dairy farmers, processors and retailers are already trading barbs through press releases. The issue is transparency — or rather the lack of it — in how prices are built across France’s dairy chain, Réussir reports.

Key points:

  • The retail federation FCD set out three demands in a 1 October statement: producer-processor contracts before retailer talks, pass-through of raw-material price changes to farmers, and maintained French milk volumes.
  • The FNPL dairy farmers’ union welcomes a «positive signal» but is under no illusions about retailers’ price war.
  • Processors (Fnil) attack promotions on milk and dairy products at «indecent» prices and the low-price policy.
  • The annual negotiations start in a few weeks and end on 1 March, during the Salon de l’agriculture.

The retail and distribution federation (FCD), which groups most supermarket chains, fired the first shot by taking a pro-farmer stance a month before the annual negotiations between retailers and national-brand suppliers open. In a 1 October statement, retailers said they were «convinced that farmers should have better information on how value is built in the food chain» and «call for more transparency and visibility for French farmers».

«The FCD wishes to contribute to a better understanding of how value is created and shared, and to bring visibility to producers».

Milk price transparency at the heart of the debate

Ahead of the talks, retailers list three demands, even ultimatums. First, contracts between producers and processors should be signed before any negotiation with retail. 

«It is the spirit of the Egalim law that must be respected to ensure the best pay for producers», the FCD stresses. 

Second, changes in the cost of agricultural raw material (MPA) should be respected and passed on to farmers — a clear target for dairy processors. Finally, retailers call for commitments to keep French milk volumes, «to secure farmers’ prospects and preserve national production potential».

«French milk and those who produce it cannot be the adjustment variable in negotiations conducted opaquely by some manufacturers. Transparency applies to everyone: producers have the right to know how the value of their milk is built at every stage», says FCD managing director Judith Jiguet.

Farmers wary of retailers

The FNPL, the dairy farmers’ union affiliated with the FNSEA, reacted swiftly. It «welcomes retailers’ awareness of the difficulties farmers face and of the need to preserve French agricultural raw material». Although «these positions are a positive signal», dairy farmers say they are not fooled by the price war among the chains.

«Given the exceptional consequences of the drought (…) every player must take its share in raising the milk price. France needs its producers to keep supplying its factories, shelves and restaurants with French milk», says FNPL president Yohann Barbe.

Processors denounce low prices

The Fnil, representing private dairy processors, published its statement at the end of the day.

«You cannot position yourself as a defender of French agriculture while staging in-store promotions at sometimes indecent prices on milk and dairy products», it says.

«It is essential to get out of this low-price policy that has been destroying value for years. Only then can we invest in efficient production tools and collectively give farmers visibility», the Fnil adds.

Negotiations set to be electric

While the Fnil insists that «the dairy sector needs neither accusations of bad faith nor an indictment», it does not hesitate, defending itself point by point, to criticise retailers. It claims retailers «constantly question» the milk price in negotiation rooms, while also regretting European purchasing alliances.

That sets the tone for the coming negotiations, which start in a few weeks and, as tradition has it, end on 1 March, right in the middle of the Salon de l’agriculture.

Source: Réussir