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Lessons from France’s organic dairy Sector

The organic dairy sector in France has significant differences – but also some commonalities – with the conventional dairy sector. Rising consumer demand, producer organisations, and regional feed crop supply are among the differences – as is the decoupling of organic and conventional prices.In 2015 it was an undisputed fact that one French farm in four had ceased activity during the previous 10 years. The current dairy crisis is about to accentuate this phenomenon, with its associated consequences, which are economic, social and environmental.This crisis arises from a number of contributing causes, which include the ending of milk quotas; the Russian embargo; a significant slowing of demand in China, not to mention rising European production. It is difficult to weigh up the relative impacts of any one factor, but  it is clear that the one which European producers can act upon is the volume of milk they put  on the market.Only political action at the highest level would be sufficient to re-establish market equilibrium by requiring a reduction in volumes. This would be unlikely, given that rivalries between member states are stronger at the moment than the political will to engage in market regulation at a European level.After the previous crisis in 2009, contracts were set up between producers and processors. Five years down the line, it was clear that these contracts strengthened the dominant position of the processing companies over the producers. Renegotiating these contracts would require a stronger hand for the producers, in both commercial aspects and setting up a policy to manage volumes.For the French organic dairy sector, things are different. It is a small part – just 2.5% – of France’s total dairy production. There are several reasons why organic  milk producers have been able to earn reasonable prices for their milk.Firstly, the consumption of organic milk has gone up by 20% over 18 months. This has ensured that there are numerous buyers for milk which is better aligned to society’s expectations. Organic milk is a fundamental requirement for the new industrial projects which are targetting new market opportunities.Secondly, producer prices are helped by the  weight of business-minded Producer Organisations (POs) in commercial negotiations. The substantial Biolait group is a major player in this sector. POs control about a third of the contracted volumes. The historical link between the cost of organic milk and conventionally-produced milk from various players in the market is well and truly broken. The reason is that price negotiations are based on real world production costs and not some hypothetical international pricing formula that is loaded in favour of contradictory financial interests.Finally, production on a lot of French organic dairy farms is based on home-grown forage crops and autonomous feeding arrangements. This undoubtedly makes them more resilient.Given all these positive aspects, could organic milk be an alternative to crisis-laden conventional milk production, for which no-one sees a way out? Without being a universal  panacea, it could have a role to play. However, the preservation of sustainable producer prices will only happen on four conditions:(1) Producers need to be fully involved and in control of the volumes of milk that go on the market, especially at certain times of the year.(2) Autonomous production systems which guarantee that French organic dairy farms can be truly independent of agricultural feed merchants.(3) The insistence on a credible technical manual, which ensures the product has credibility and is traceable, to meet public expectations.(4) The existence of enforceable rules protecting organic production from the risks of external contamination.This is why Biolait, the first organic dairy co-op in France, has established a quality policy that defines our milk as much by the context in which it is produced as on its intrinsic qualities.Built on these three principles, the sales arm of the Biolait PO is developing its business with collection points across France’s milk-producing regions. The new option of recreating dairy holdings on farms with historic dairy quota records has been chosen by about 15 new producers in the past year.“Organic everywhere and for all” is the founding slogan for our group. Today it is well on the way to becoming a reality for milk producers supplying the many specialist dairies, which are still alive in the land of 360 cheeses.Picture credit: ChurchtimesThis article was originally published on Arc2000's website.