The French government has brokered a last-minute deal between embattled French dairy group Entremont Alliance and its suppliers on milk prices in July and August.

Given its financial difficulties, Entremont had put an offer on the table of 20.5 centimes per litre of milk, well short of the industry-wide agreement signed on 3 June, which makes provision for 27.5 centimes per litre.

Faced with the prospect of re-igniting the anger of dairy farmers on the price issue, the government succeeded in convincing Entremont’s banks to inject a further EUR10m (US$14.2m) of funding, allowing the group to increase its offer to producers to 24.5 centimes/litre for July and August.

“We have gained two months in which to examine bids for Entremont within a good industrial relations climate,” agriculture minister, Bruno Le Maire, said.

Last week, Entremont confirmed it had received a joint takeover bid from Sodiaal and Bongrain.

Sodiaal already has strong links with Entremont Alliance. In July 2007 the groups agreed to integrate their baby food, elaborated milk ingredients and nutritional and dietetic operations.