Price of milk and implications

The yoyo effect

2007 : a historic year due to a gap between supply and demand for agricultural products.
In the face of tension in the global market for agricultural products in general, and dairy products in particular, the sale price for these products soared. In parallel, the price of milk in France remained relatively stable due to the non-responsive price setting mechanism in place (smoothing over 12 months).

2008 : a disastrous year due to the repercussions of the previous year.
While the milk markets plummeted to unprecedented levels due to a reversal in the supply and demand gap, milk prices in France increased by more than 15%.
Unfortunately, this increase was totally out of phase with our European neighbours, and resulted in a loss of competitiveness for exports and higher imports, particularly in Emmental.

In this context, and based among others on the decision of the French competition authorities to ban any national milk price recommendations, ENTREMONT ALLIANCE decided to apply a more responsive milk price from 1 July onwards.
Despite certain reactions against the decision, this laid the ground for a more responsive reaction to milk prices in keeping with the product mix of the companies concerned.

2009 : a year of transition towards a more responsive system.
From 1 April onwards (start of the 2009-2010 dairy season), the ban over national milk price recommendations will be reinforced again and only the publication of indicators will be permitted. These should notably include cheese ingredients (mainly intended for export), and be more responsive to market variations in order to prevent unfavourable scissor effects throughout the whole industry.
Discussions are also underway regarding the regionalisation of milk prices, since Brittany has become aware of its specific characteristics and assets.

Milk price schematic (2004-2008)