French dairy firms are to cut milk prices by an average of more than 30% in the second quarter of the year, triggering a fresh row with producers.   

Earlier this month, the dairy processors federation, the FNIL, said milk prices in France were among the highest on the market and “disconnected from reality”.

Price talks between producers and dairy processors broke up last week without an agreement. Firms are now setting prices individually with each of their suppliers.  

A spokesman for Lactalis told just-food that the company is poised to reduce its producer prices by just under 30% in the second quarter, largely a result of the fall in prices for powdered milk and butter.

“A year ago, the market was euphoric and prices for these commodities had rocketed while milk producers saw their pay rise by 30%. These trends have gone into reverse. Dairy firms simply can’t live with current prices and levels are set to return to those of end-2006/early 2007,” he said.        

The milk producers federation, the FNPL, is bracing itself for an average price in April of EUR205-225 per 1,000 litres compared to EUR309 in April last year.

“We are not denying that prices of powdered milk and butter have fallen sharply but the same can’t be said for dairy retail goods, which represent a good part of our customers’ business. An average reduction of 30% means our members will be paid less than cost prices and they won’t accept it,” a spokesperson said.