Lactalis strikes price deal with French milk producers

PARIS/RENNES (Reuters) - Lactalis, the world’s largest dairy firm, reached a deal with French milk producers on Tuesday to raise prices paid to suppliers and farmers called off their week-long protests, the company and unions said.

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Lactalis agreed to pay an average 275 euros ($307) per 1,000 litres for the whole of 2016, Dominique Barrau, secretary general of France’s largest farm union FNSEA, told Reuters.

“It brings Lactalis to the level of its competitors,” Barrau said, adding that the union had called for an end to protests.

The offer was 10 euros higher than an initial proposal before the first talks on Thursday last week, unions said.

Lactalis, which produces cheese, milk, butter and yogurt with brands including President, Bridel, Galbani and Lactel, confirmed the agreement without giving any details.

French Prime Minister Manuel Valls called the deal a positive agreement on Twitter.

Between 2,000 and 3,000 farmers have protested since Monday last week outside the family-owned firm’s headquarters in Laval, northwestern France, bringing hundreds of tractors, cows and trailers. Farmers also carried out protests in supermarkets and called on consumers to boycott Lactalis products.

European dairy farmers are struggling with a slump in milk prices caused by oversupply after the European Union scrapped quotas last year, Russia banned Western food imports and Chinese dairy imports weakened.

To reach the average level of 275 euros for the year as a whole, Lactalis will lift prices to 290 euros per 1,000 liters for the milk purchased between August and December, a member of a producers group said.

Lactalis was paying 257 euros per 1,000 liters before the talks.

“It’s much better than what Lactalis had offered so far,” Pascal Clement, president of the FNSEA’s regional branch for western France, said.

Still, unions put production costs at about 330 to 380 euros per 1,000 liters, depending on the size of the farm.

Lactalis does not publish results but said on its website it has a turnover of 17 billion euros ($19 billion), employs nearly 75,000 people in 85 countries in Europe, the Americas, Asia and Africa, and has factories in 43 countries.

Reporting by Sybille de La Hamaide in Paris and Pierre-Henri Allain in Rennes; editing by David Clarke