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Auchan has announced a partnership agreement with French dairy group the Laiterie Saint-Denis-de-l’Hôtel (LSDH) and a group of milk producers in central France, the Association de Producteurs de Lait du Bassin Centre (APLBC), in response to the crisis affecting the sector in the country.

LSDH supplies the French retailer with private-label milk from its 370 producers.

The aim of the three-way alliance is to market quality milk that is accessible in price to consumers while offering a fair remuneration to producers, Auchan said.

The agreement covers a three-year renewable period and concerns 10m litres of milk. It incorporates a mechanism which sets a price for the six months to come in order to take the price volatility out of the market, Auchan added.

The deal also comprises an environmental aspect based on animal well-being, the use of ‘green’ packaging and ‘short’ supply chains where provision is made to sell the milk at Auchan hypermarkets located the closest to where it was collected.

The move is also a response to the decline in the number cow’s milk producers in France, which has diminished by 35% in the past 10 years.

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By GlobalData