French dairy groups and farmers have reached an agreement on milk prices, allaying fears of a repeat of the disruption in supplies to processing plants seen in 2009.

On 12 August, union delegations went to the head offices of dairy groups and co-operatives to demand the application of a price agreement signed last year, paving the way for the re-opening of negotiations.

This had been preceded by several weeks of protest which saw farmers across France call for a boycott of leading cheese brands Président, Caprice des Dieux and La Vache Qui Rit, claiming brand owners Lactalis, Bongrain and Bel were not honouring their commitments on prices.

The price agreement reached late on Wednesday will see farmers paid EUR330 (US$424.8) per 1,000 litres for milk supplied in July and EUR301 per 1,000 litres over the whole of 2010 – a 10% increase on 2009 prices and corresponding by and large to what farmers were demanding.

However, in return for granting the price hikes, the dairy groups have succeeded in enlarging the agreement to include the introduction of a “competitiveness index” which will measure the gap between milk prices in France and Germany and serve as a reference for setting price levels in 2011.

It makes provision for the price gap with Germany to be no wider than EUR8 per 1,000 litres, which compares with current estimates of EUR9.

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