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Agreement To Raise The Milk Price

09 September 2010

FRANCE - French milk producers have seen a 10 per cent rise in milk prices compared to last year, says the European Milk Board (EMB).

This increase of the milk price that producers will obtain in the third quarter of 2010 amounts to 3,1 euro cents/litre compared to previous year.

The agreement was reached after the major unions, including the French famers union the FNSEA, put pressure on the industry so that the formula for price calculations, which was approved by the interbranch of the dairy sector on June 3rd 2009, would eventually be applied. Certain dairy products in French supermarkets were tagged with stickers.

The FNSEA gave the industry until July 12th 2010 to agree to the demand for a milk price increase. Nicolas Sarkozy, the French president, was delighted that all parties involved reached an agreement. He declared that the government would “support the efforts of the dairy sector to develop a strategy to strengthen its competitiveness in Europe”.

Notwithstanding this agreement, the representatives of the industry succeeded, as the French milk producers accepted a milk price for the year 2011 that is coupled to the German milk price. The French milk price may at most deviate from the German price by 0.8 cents per litre.

Willem Smeenk, Secretary General of OPL and member of the EMB board of directorS, is of the opinion that this agreement is rather bad, as the milk producers conceded to align from 2011 onwards the French milk prices with the German prices.

“Germany is a country that exports a lot of milk. That is why the German prices are lower than the French prices. There will be a downward spiral of prices: French prices will be adjusted downwards and German prices will subsequently plummet even more so that German milk can still be sold on the French market and so on and so forth. This will lead to vicious circle. The milk price will continue to decline. This yields no advantage, neither for the French, nor for the German producers. "

Pascal Massol, president of “Association des Producteurs de Lait Indépendants” (Association of Independent Milk Producers) (APLI) says: “It is incredible; we sell milk for price that does not cover production costs. That is why ALPI the did not take part in the activities of the unions.

"31 cents does not cover the production costs of 1 litre milk. OPL and APLI share the same political view, saying that this agreement yields no progress. The contrary is the case. Now the industry has the possibility to adjust the French price to the German price that is comparatively low.

"Once again it seems that the union has taken a short-term approach, as this agreement might result in a significant decline of the price from 2011 onwards in two major milk-producing countries."

TheCattleSite News Desk


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