Lactalis Leerdammer, which is part of one of the world’s largest dairy companies, has pledged that it will make the milk price system “more transparent” for Dutch dairy farmers.
This follows a ruling from the Netherlands Authority for Consumers and Markets (ACM) that the cheese production company, Lactalis Leerdammer, has to bring its supply agreements in line with the Dutch Act regarding unfair commercial practices in the agricultural and food supply chain.
Under this act, Lactalis Leerdammer cannot unilaterally change the milk price it pays to dairy farmers.
However, a supplier association of dairy farmers in the Netherlands had submitted a complaint to ACM about this practice.
Following an investigation into this complaint ACM concluded that Lactalis Leerdammer “violated the prohibition on the unilateral change to the terms of a supply agreement”.
Dutch dairy farmers
ACM highlighted in its ruling that each month Dutch dairy farmers are informed by Lactalis Leerdammer what price they will get for their milk without Lactalis Leerdammer and dairy farmers having agreed in advance on how that price is actually determined.
“Since suppliers of Lactalis Leerdammer exclusively supply Lactalis Leerdammer, and dairy farmers are unable to decide in the short term to stop supplying milk, dairy farmers basically have no other choice than to accept this price,” ACM stated.
It has now ordered Lactalis Leerdammer to bring the supply agreement in line with the Dutch Act within a three month period.
The Netherlands Authority said it can do this by including a transparent pricing system in the supply agreement.
For suppliers, it needs to be clear in advance how prices are determined, and suppliers need to be able to verify this.
“If Lactalis Leerdammer fails to comply with this order, it will have to pay penalty payments of up to a total of €1,050,000,” the ACM added.
Royal Lactalis Leerdammer
Leerdammer has been part of Groupe Lactalis since 2021.
Jan Verbessem, general manager, Royal Lactalis Leerdammer, acknowledged that it is the milk that mainly comes from Dutch dairy farmers that “largely determines the quality of our cheeses that are sold worldwide”.
“Good and open cooperation with the dairy farmers is therefore of great value to everyone.
“That is one of the reasons why Royal Lactalis Leerdammer is taking steps to make the milk price system more transparent,” he added.
The company said it will start talks with representative dairy farmers in October.
However it has also claimed that it will require longer than the three months which the ACM has specified to develop a more transparent supply agreement.
Lactalis Leerdammer is also taking a separate legal step and is seeking an assessment of ACM arrived at its decision in relation to the supply law.
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