According to the French news agency AFP, dairy giant Danone has asked the
milk producers supplying their five factories in France to take their production
costs into account when fixing the price of milk. However, this new formula to
calculate price could be accompanied by a drop in the volume of milk bought
from certain producers.
Danone
Danone has initiated discussions with producer organisations in order to put
forward concrete proposals. The price at which milk is bought by Danone is
currently calculated on the basis of historical factors on one hand, and market
indicators (butter and milk powder) on the other. Danone has further clarified
that this proposal has two aspects: Producers have been asked to introduce
their production costs into the price formula progressively over the next three
years, starting from October 1. “At the same time, we will discuss an
adjustment of our needs with them to ensure supply to our factories. The latter
could lead to a reduction in volume purchased in certain cases.”
Milk producers
For milk producers, this proposal is a step in the right direction. That this promising development is not regarded positively by the FNSEA is incomprehensible. According to FNSEA Vice-President Luc Smessaert, “Danone cannot be allowed to set too many conditions either” and he views the reduction in milk volume purchased by Danone as “problematic”. The proposals by the OPL, APLI and EMB regarding production costs are beginning to find an audience. This should hopefully also facilitate price negotiations carried out by the dairy producer organisations France Milk Board (FMB).
Though it is still too early to claim victory as ours, this is a first step by private industry and must be welcomed. We have to continue working with all the EMB member organisations across Europe so that other dairies, cooperatives included, also follow suit. It is also necessary to ensure that fair and equitable remuneration for producers is baked into the cost of production on farms.
Thanks to Véronique Le Floc’h, President of OPL, France
