Thanks to a renewed rise in milk prices, the French dairy supply chain is regaining its strength. However, debate continues to rage between producers and processors over milk contracts after the abolition of quotas in 2015.

French Agriculture Minister Bruno LeMaire yesterday visited the international exhibition for animal husbandry taking place in Rennes. Speaking at the event, M LeMaire underlined his commitment to contractualisation in the supply chain, a subject which is causing much perturbation amongst dairy farmers. image expired

He said he was confident that France’s thousands of milk producers could negotiate fair terms on milk prices with the large industrial processors and that the state “would not yield” on the point, which he was sure would guarantee stability.

The end of milk quotas in 2015 represents the end of an administrative management of the milk industry for around thirty years, whereby each producer had a production target which they could not exceed without incurring a levy.

To usher in the new economic era heralded by the end of the quotas, the French government has imposed contracts between large enterprises including Danone and Lactalis and the dairy farmers who supply their milk. Their aim is to secure a stable income for farmers, whose business was shaken in 2009 and 2010 by repeated crises due to lower milk prices and who were set to lose out at the hands of processors based on their initial overtures to farmers.

In April this year, farming minister LeMaire rebuked the processors, denouncing as “unacceptable” their initial proposals to farmers. He demanded “fair and equitable” contracts be drawn up. The negotiation process between the farmers and large businesses is now underway in France.

The French dairy union FNPL, a branch of the national FNSEA farming union, announced in a statement on Friday that the discussions “were progressing well.” The union has long supported the idea of contracts, on the condition that they are negotiated with input from stakeholders throughout the supply chain. To this end they have urged producers to form collectives, the better to stand up to the large companies.

Benoît Champalaune, a producer from Brittany and president of the Young Farmers (JA) union who sells to Lactalis (the largest French processor, which deals with 15,000 producers) said it was time farmers “woke up”. M Champalaune said, “Alone a farmer is nothing compared to Lactalis.” He is the co-founder of the “Association of Lactalis Suppliers of Britanny,” (APLBL), which aims to work cooperatively to negotiate fair contracts with the dairy giant.

The negotiations between the APLBL and Lactalis have broken down over the role played by producer organisations, as Lactalis want to deal directly with the farmer. The company has mounted the pressure by fixing a deadline of 30th September on the producers, who have asked for more time to complete the negotiations.

French newspaper Libération reported today that the FNPL union has called upon dairy farmers to remain stalwart and not give in to deadlines set by the companies. According to the newspaper, FNPL head Gilles Psalmon, had asserted that, while Lactalis refused to recognize the producers’ organizations, they would not sign contracts.

Other smaller unions have called for the creation of a single national milk board; the France Milk Board would represent all producers, rather than working on the basis of one producer organisation per company. They also suggest the price of milk be based on the cost to the producer; under current circumstances this would mean a milk price of 412€ per 1,000 litres compared to between 350 and 355€/1,000L today.