Food: the sector ready to renegotiate prices, milk exempted
It’s go again. Companies in the food industry, represented by Ania and Ilec, have agreed to reopen price negotiations with large retailers at the request of Bruno Lemaire who received them on Wednesday. “It means that prices will be renegotiated downwards and in advance, so we can break the inflationary spiral,” said the Minister of the Economy.
The Association of Food Industries will call on the 75 largest manufacturers to sit down around the table, when the price of their products has increased by more than 10% during the agreements made in March with the distribution. And that these companies have since recorded “a drop in the cost of one of their inputs of more than 20%”. “No one is running away from their responsibilities,” said Richard Panquiault, president of the Institute for Consumer Business Liaison (Ilec) on Wednesday.
SMEs, who feared to bear the brunt of this reduction in prices, are excluded from these renegotiations. Like the milk producers and industrialists who breathe a sigh of relief. “There will be no generalized renegotiation. The efforts of dairy processing players to maintain a milk price that ensures fair remuneration for milk producers are recognized,” welcomed the National Federation of the Dairy Industry (FNIL).
Costs still rising
Last year, professionals had indicated that a liter of milk had to be sold at 1 euro to ensure remuneration for breeders. Here we are. The average price per liter of UHT or pasteurized milk reached 1.07 euros in 2022, an increase of 8%. This is less than inflation on food products (+13%). On the shelves, it is rather around 1.20 euros.
But for Syndilait, which brings together manufacturers of brick milk “we are still far from the mark”. Because this increase recorded in February was only applied by distributors from October. As a result, companies took the full brunt of the boom in production costs for the rest of the year. With a surge of 33.6% for energy, and 33% for plastic, calculated the FNIL.
“We have just obtained an upgrade with the 2023 negotiations, which will help us get out of this. There is no question of going back”, insists Eric Forin, president of Syndilait, and general manager of Candia. Especially since if the inflation on the side of the breeders is protected by the Egalim law, this is not the case for the industrialists. In 2023, professionals expect further cost increases of between 18% and 20%.
Structural erosion
However, the sector remains fragile. Consumption of milk in bricks and bottles is down again in 2022 (-3.9%) to 2.65 billion litres, a structural decline for more than ten years. “After the rebound of the Covid, where the French had time to have breakfast and cook, the erosion started again, underlines Emmanuel Vasseneix, vice-president of Syndilait and boss of the Laiterie de Saint-Denis-de-l ‘Hotel. The new generations are increasingly using meal delivery”. This market accounts for nearly 13% of all dairy products in supermarkets, or 2.37 billion euros.
The new Nutriscore classification will not encourage purchases. Milk is indeed now assimilated to a drink, like flavored water or certain fruit juices. This has the effect of downgrading it from category A to B, see C for whole milk. Which is not to the taste of industrialists. “We don’t drink milk to stay hydrated, it’s a food, insists Eric Forin. It is a source of proteins, vitamins, and essential calcium, especially for the growth of adolescents. We have to come back to common sense”.
Professionals fear that this development will hide a future tax. “If tomorrow, sugary drinks are taxed, as lactose contains it, this will further increase the price of milk”, worries Emmanuel Vasseneix.
