French Pig Sector in Turmoil over Prices and Contracts

ANALYSIS - The French Agriculture Minister Stéphan Le Foll has called for a working party to identify and monitor the different contracts for pig farmers governing prices and to implement changes.
calendar icon 3 September 2015
clock icon 5 minute read

The minister also indicated that any support funds related to contracts that were put in place to help the farmers could benefit from tax exemptions.

The moves follow a round table meeting with the government and the farmers, processors, slaughters, curers and all those in the pig meat supply chain on Thursday (27 August) in a bid to find a solution to the crisis in the pig sector in France.

The French agriculture ministry had proposed a target price to be paid to farmers at the focal Plérin Breton Pork Market.

However, when this was implemented earlier in August, it led to two major processors – Cooperl and Bigard – pulling out of the market.

At the time Cooperl, which has 2,700 farmer members and 5,000 employees, said that the company had pulled out and forced the collapse of the cooperative arrangement because the target price set in June of €1.40 was unsustainable as the price on the German market was €1.10 at the time.

Cooperl said that while it backed the concept of higher prices for French farmers 35 per cent of its products were exported and the artificially high prices paid on the French market could not compete with other competition in Europe.

The farmer owned cooperative said that it continued to support its members by slaughtering more than 100,000 pigs a week, but the prices were disconnected from those of its European competitors.

Cooperl in pulling out of the Breton Pork Market called for the establishment of European aid for the domestic market because of the overproduction caused by the closure of the Russian market.

Cooperl also called for mandatory country of origin labelling of meat in processed products and an easing of labour costs so the sector could regain competitiveness with the large German processors.

The farmer cooperative also called for compensation for French farmers for the tax advantage that is granted to German producers and relief on regulations to help restructure and modernise the sector.

Cooperl said that by implementing a price bar at the Breton Pork Market, below which pig prices could not fall, put up a barrier to buyers.

The action by two major processors in boycotting the market and the price setting, France also faces a large backlog of pigs on the market

Daniel Picart and Jean-Pierre Joly, President and Director of the Breton Pork Market are reported to have written to their members saying that with Cooperl pulling out it has left them with 10,000 pigs on their hands.

The Breton Pork Market is also concerned that the loss of Cooperl and Bigard represents about a third of the pig market in the region.

However the two market bosses have said they could not understand the stance of the companies, who are paying premium prices to their members but not taking part in the market.

They say that the two companies have totally ignored the market agreement signed in March

The French meat industry organisation SNIV-SNCP and the Coop de France said that companies could not meet artificially set prices and they also hit planned promotions and new marketing methods.

They said that September promotions have already started in retail chains based on prices that had been set for several weeks.

The two organisations called for more transparency in the supply chain both upstream and downstream to help increase competitiveness.

They also called for clear origin labelling, steps to boost exports in the face of the Russian ban and a reduction in competitive distortion in the market.

In the round table meeting on 27 August Mr Le Foll said that contracts could be a way forward to secure margins and combat producer price fluctuations along the food chain.

He said that security funds related to contracts could help to share the risk of market fluctuations and that these could benefit from tax exemptions.

The meeting agreed that the issue of contracts was a matter of small changes to be made in parallel with the changes made to the Breton Pork Market, which is central to pricing.

This will be central to proposals put forward by the National Pork Federation (Fédération Nationale Porcine) backed by Mr Le Foll to bring confidence back to the sector and improve its competitiveness and bring emergency help to the pig farmers in difficulty.

The French government has already increased its own procurement threshold to boost the sector and Mr Le Foll was due to speak to the European agriculture commissioner following the round table meeting with the industry in preparation for the European Council which is to take place on 7 September.

Also in preparation for the council meeting Mr Le Foll was to meet his counterparts from Italy, Spain and Portugal on Friday 28 August and the German and Polish ministers in Berlin on Monday 31 August.

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