An “avant-garde” legal battle between the food industry giant Savencia and the Sunlait Producers Association is capturing the attention of the entire French dairy sector. Ranch owners condemn what they perceive as “weaknesses” and “undermining work,” while the industrialist denies any “unlawful pressure,” as reported by tv5monde.com.
On his farm near Saint-James (La Manche), Landry Rivière recounts the chronology of a conflict that began with what he describes as a “too beautiful story.”
In 2018, Savencia and Sunlait agreed on a “pricing formula in accordance with the Equality Law,” he recalls.
The Equality Law, passed in the same year, aims to ensure fair prices for producers, taking into account production costs. Therefore, contracts and associated prices should be proposed by farmers.
Sunlait, which produces nearly 600 million liters of milk annually, accounts for 17% of Savencia’s supplies. Conversely, Savencia is the sole customer for this thousand breeders, united in the Producers Organizations Association (PDO).
Unilateral Price
Producers from the Western Milk, one of the six producer organizations (POs) within Sunlait, observe that the price is rising above the national average: unlike Savencia, other producers are not complying with the Equality Law.
“When Savencia realized they were paying us more than its competitors, in 2019, they denounced the memorandum of understanding to establish a unilateral price,” explains Mr. Rivière.
Subsequently, Sunlait and Savencia engage in several rounds of mediation, but to no avail. “We were facing a wall,” laments Arno Lorain, Sunlait’s treasurer. “For them, the PO, it is silent, it agrees with the price.”
In 2021, PDO filed a lawsuit against Savencia for breach of contract. Thus begins a legal process akin to “David vs. Goliath,” according to Sunlait President Loïc Delage.
The group is the second-largest cheese producer in France, the fifth-largest cheese producer in the world, with more than 25,000 employees worldwide, and a turnover of 6.5 billion euros in 2022, thanks to brands such as Tartar, Lion’s Heart…
In March 2022, Savencia terminated the framework agreement linking it to Sunlait. Dialogue deteriorates.
Then, in August, the Coutances Court of Appeal ordered Savencia to pay Sunlait 25.9 million euros: the group “cannot rely on the behavior of its competitors to release itself from its contractual obligations,” it motivates.
“It is here that Savencia began to charge us for having dared to appoint them, through undermining work (…), hitting below the belt,” asserts Mr. Lorain.
Nearly ten ranch owners surveyed by AFP said they “feel pressure” from the group to make them leave Sunlait.
Thus, Benjamin Obry, a 34-year-old milk producer, has been waiting for more than a year to receive a certificate indicating the amount of milk supplied to the dairy. Without this certificate, banks do not grant loans, projects stagnate. “Savencia tells me that if I get out of Sunlait, it will be easier for me.”
Another ranch owner from Normandy talks about “constant pressure, forcing [her] to leave Sunlait (…), which is difficult to accept.” Fearing “reprisals,” she wants to remain anonymous. “Savencia has billions of euros. If they want to break me, they will break me.”
The same phrase is repeated every time: Savencia “divides to rule better.”
Because Savencia cannot do without milk from dairy milk: milk production in France is declining, explains Olivier Carvin, an agricultural economist from the Brittany Agricultural Chamber.
Its “strategy is to reduce relations with PDOs to directly contract with ranch owners,” he specifies.
However, concluding an individual contract with a producer when there is already a framework agreement “is illegal,” assures Fabien Bart, a lawyer specializing in rural law, who fears “abuse of the form of economic imbalance.”
Accusations, refuted by Savencia. The group only presented producers with “the realm of possibilities” beyond Sunlait, explains Sophie Godefroy-Maurisson, General Manager of Savencia Milk Resources to AFP.
“Under no circumstances did we bypass collective negotiations, exert pressure on producers (…) or propose unlawful solutions,” she declares.
If ranch owners felt this as “pressure,” it is because they are “concerned” about the situation caused by the ongoing legal proceedings, which “is not our initiative.”
Fraud Prevention Services (DGCCRF) are said to be in the “diagnostic” stage.
“Unbearable”
In December, the Caen Court of Appeal overturned the ruling and declared Savencia’s decision “completely legitimate,” underlines Ms. Godefroy-Maurisson.
According to her, Savencia cannot “have a milk price that significantly differs from the market price, more than 20 euros (without) losing market share” to its competitors Lactalis and Sodiaal.
There have been “disagreements for five years.” “Even if our price is slightly higher than that of major market players — up 1.5% from last year — we cannot exceed this.”
Several days later, in an email, the Savencia group informs breeders of the “final termination of relations with Sunlait.”
Therefore, no negotiations for a new framework agreement are being conducted. Ranchers fear that after the denunciation of the existing agreement, which came into effect on March 8, milk will no longer be collected from them.
“There are alternative solutions for Sunlait,” he reminds them.
In January, the agricultural crisis catches the political world by surprise. Sunlait dairy product producers do not stand idly by, and some of them demonstrate in
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