Price of milk. "Inflation is no longer taboo", says the president of the Sodiaal cooperative

The Sodiaal dairy cooperative, bringing together 17,600 producers in France, announced in August 2021 a downgrading of 10% of organic volumes over a period of twelve months to non-GMO milk. This represents a huge financial loss for all organic farmers , alarmed the Young Farmers of the Great West (Pays de la Loire, Brittany and Normandy) in a press release released on September 9.

The unions say they are very worried, both for the young people installed and for all the project leaders who have planned to engage in the organic system . For breeders, “100% of their volume is produced with organic production costs, they have no leeway! ​In addition, in a context of a general rise in raw materials, point out the JAs, the impact is likely to be amplified ​.

Damien Lacombe, president of the Sodiaal cooperative, answered questions from Ouest-France, this Friday, September 10, 2021.

Too much organic milk?

We have worked hard to properly structure the organic milk market. In volume, we have gone in a few years from 40 million to 204 million liters of milk in 2020. We will reach 230 million next year. We were very careful to monitor the balances. And we remain confident in the medium term for organic milk.

But this year 2021 has combined two effects: a reversal in consumption, it had increased a lot during confinement, then it decreased, while other milk segments have progressed (pasture, non-GMO, etc.) . And, at the same time, this year has been very favorable for forage everywhere. So too much milk was produced. As far as we are concerned, it is an influx of 15 million additional organic liters. We have therefore decided on temporary measures, redirecting 10% of these volumes to other markets, to preserve the value. We are very careful, these are responsible measures.

Do you yourself think that milk is not remunerated well enough?

After the Estates General on Food, we worked a lot on the question of price. He rode the first year. Then in 2020, there was a small drop. For 2021, we are considering a price increase of +13 to +15 €. But, unfortunately, this will be insufficient in relation to the continuous increase in charges and costs. We are therefore going to weigh very heavily on the 2022 trade negotiations [between producers, processors and distributors], expecting an increase of +5 to +7%. On milk, the margins are much too low, large retailers will not be able to act. This increase will therefore have to be borne by the consumer.

The word inflation should not be a taboo word for milk. If we want to preserve the sector over the long term, prepare it to meet all the new requirements demanded of it (climate, carbon, reduction in plastics and packaging, Green deal, etc.), then the citizen, who wants all this, must also agree to pay the price. This citizen is also a consumer.

How much do you estimate this price increase to be?

We need this inflation: a carton of milk today is worth €0.83. You have to agree to increase the price by 6 cents, or +7%. Over the year, for the average consumer (80 liters per year), this represents an increase of €5 per household. This effort, very low for the consumer, will allow us to face all this...

And how is the infant milk powder market doing?

By taking over the Entremont company, we took over a contract with the Chinese Synutra, with its very large factory in Carhaix (Finistère). Faced with the problems encountered by Synutra, we have taken over this tool. We don't regret it, even if the tool has experienced development difficulties. We have just started milk deliveries again, since the beginning of August.

But the infant milk market has hardened over the past year. China remains a very important market, but the number of births there has fallen from 18 million per year, four years ago, to 12 million… The period is therefore difficult. Especially since China absolutely seeks to favor its local players: Feihe, which only exists on the internal Chinese market, has become the world's No. 4 in infant milk powder! In the short term, the context will therefore remain difficult.