France to intensify supermarket milk price scrutiny - report

By Neil Merrett

- Last updated on GMT

Related tags: Dairy farmers, Dairy, Milk

As protests continue around Europe from dairy farmers concerned about covering their costs in the current market, French producers appear to have succeeded in speeding up government scrutiny of supermarket pay practices, according to reports.

At the weekend, French farmers’ unions reportedly blocked almost a third of distribution warehouses supplying major chain retailers in the country as part of a planned 48-hour protest about the margins supermarkets are making on milk.

Amidst wider European dissatisfaction from farmers, who claim they are failing to cover their production costs at current prices, the French government is now expected to step up reviews of supplier concerns relating to the role of supermarkets.

Authority pledge

The French agriculture minister, Michel Barnier, and Luc Chatel, who heads industry and consumer affairs in the country, told the Reuters​ news agency that the publication of a study into prices and margins of retail milk prices was now to be speeded up amidst the concerns.

"The government is fully aware of the level of consternation and is well aware of the current dissatisfaction,"​ Barnier told reporters.

According to Reuters​, local farmers’ group FNSEA says it was satisfied with this government response to the protests, claiming over the weekend that the actions would cease after the 48-hour period.

Euro criticisms

It is not just French milk producers who are increasingly critical of the role they feel major retailers are playing in setting prices. Last month, the European Milk Board (EMB), a EU-based lobby group, suggested that ongoing market deregulation in the block is distorting the supply chain in favour of retailers.

"In this way the EU-Council has given them [retailers] even more power and once more shifted the balance to the detriment of the farmers,“​ stated EMB president Romuald Schabe at the time.

British calls

However, in attempts to try and boost British milk production, UK-based organisation the National Farmers’ Union (NFU​) called on the country’s main retailers to back three national commitments earlier this month.

These commitments include pledges to source British dairy products, a pricing mechanism that can provide milk and cheese suppliers with sustainable milk prices to help meet costs and promotion of the Red Tractor logo on British private label products.

The NFU’s Gwyn Jones says that retailers are compounding the concerns of global farmers, which he claims are struggling to earn a living from milk production. Jones says this is especially true of markets like Britain, which he claims are committed to high welfare and environmental standards.

"Consumers are paying a fair price for British dairy products but that money is not distributed fairly down the supply chain,”​ he states. “The difference between profit and loss for dairy farmers in this country is a small fraction of the overall margin on milk and dairy products, which could easily be afforded."

Retailer commitments

Despite calls for greater support, retailers across the bloc have pledged various commitments to farmers as part of their attempts to support dairy production and alleviate recent criticisms.

In outlining its own plans for securing dairy supply, Justin King, chief executive for UK retailer Sainsbury’s said earlier this year that, although it will continue to invest in its dairy farmers, it did not believe a contractual price would benefit the industry in the long-term.

The EMB itself has also conceded that following strikes by dairy producers last year, Germany’s more discount-focused retailers had worked in favour of supporting farmers with a revised milk price, albeit it on a temporary basis.

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