French farmers step up fight against dairy giant Lactalis

 

Dairy Giant Lactalis

Dairy Giant Lactalis

French milk producers on Monday stepped up their protests against global dairy giant Lactalis amidst a slump in prices ahead of crunch negotiations on Tuesday.

Hundreds of angry dairy farmers, demanding higher milk prices, on Monday vowed to continue their week-long blockade at the Lactalis headquarters in northwestern France.

Farmers also began a nationwide protest at sites forming part of the supply chain of the family-run dairy giant around the country. On Monday evening, protesters gathered at 18 processing plants, warehouses and supermarkets, according to leading French farmers’ union FNSEA.

Lactalis had agreed to renegotiate the price paid to suppliers last week after farmers occupied an intersection near the headquarters of Lactalis in the western French city of Laval. A glut in milk supplies and diving dairy prices are forcing French farms to sell below cost with producers blaming the company for paying less than competitors.

The dairy giant, which pays 257 euros ($290) per 1,000 litres, said in a statement on Friday that it had offered to raise its price by 15 euros as of September,1 but farmers said it was not enough and vowed to continue their protests.

“We’re wondering if Lactalis is really committed to working this out,” Florent Renaudier of the FDSEA union told Reuters.

Lactalis was reported to have agreed to a fresh round of talks with dairy producers on Monday evening.

Hundreds of farmers protesting in Laval since August 22 have blockaded an intersection with 200 to 300 tractors, cows and trailers. They also launched protests in supermarkets targeting Lactalis products. Lactalis mainly produces cheese, milk and butter with brands including President, Bridel, Galbani and Lactel.

Lactalis said the unions’ reaction was “irresponsible”, maintaining that it faced strong competition elsewhere in the European Union, where milk prices have fallen more steeply than in France over the past year.

Lactalis spokesman Michel Nalet told France Inter radio last week that it doesn’t make financial sense for his company to pay French producers more when other European producers accept lower prices for their milk.

Many milk farmers are being forced to sell their product below cost.

Boris Gondouin, a French member of the European Milk Board (EMB), a lobby group based in Brussels, told FRANCE 24 that dairy farmers could no longer earn a decent living from their work.

“Large farms have the biggest problems because they often have employees and can’t manage to pay their salaries anymore, whereas family farms may not earn enough money out of their own work but at least they don’t have to pay salaries,” he said.

Hardships for farmers

But the hardships facing French farmers, and their European counterparts, have been evident for some time.

The abolition of European Union milk quotas in April 2015 helped trigger a collapse in prices that have not recovered despite an initial aid package agreed last September.

The slump in prices has been exacerbated by Russia’s ban on Western food imports and weak Chinese dairy imports.

There is currently a global production surplus of over 11 million tonnes of milk, according to the EMB.

A family empire

Despite being one of the world’s leading dairy companies, Lactalis remains a family-run business with 230 manufacturing sites in 43 countries and up to 75,000 employees. It posted a turnover of 17 billion euros in 2015.

CEO Emmanuel Besnier was described in a recent Le Point article as a reclusive mogul in the vein of America’s Howard Hughes.

His grandfather, André, started the company in 1933 and invented Camembert President. But since Besnier took over, the Lactalis CEO has earned a reputation for making hardheaded business decisions which would no doubt have helped place him fifteenth in a list of France’s richest men.

A close look at the company’s past business dealings, however, show a history of taking extraordinary measures to control prices.

Back in February 2011, Besnier took on the Leclerc supermarket chain, demanding a price increase. After the distributor refused, he ended all deliveries of his products to Leclerc.

Between 2006 and 2012 Lactalis — along with several other French companies representing 90 percent of the country’s yoghurt manufacturers – was involved in a price-fixing scandal that forced up yoghurt prices in France.

France’s competition watchdog ruled that the companies pay a staggering 192 million euros in fines.

A change of policy

The French agriculture ministry meanwhile announced Friday it will unveil a plan to regulate production in line with the announcement last month of a 500 million euro ($553 million) EU package, which includes compensation for farmers who produce less milk.

France is to receive about 50 million euros of the EU money which the French state may choose to double.

But Silvia Däberitz, a director at EMB, says the EU must change its policy regarding the dairy sector.

“If the demand does not keep up with supply then there should be a systematic reduction of dairy production,” she said. “This will give the EU a chance to avoid a concentration of production in only a few regions, while other regions bleed out.”