According to the Food Authority Organization, food prices increased by 2,4% during the first trimester of 2012. One of the most impacted products is egg. Egg prices across the EU increased by 40% since January 2012 as the result of an increasing demand and the EU Welfare of “Laying Hens Directive”, which ban traditional cages for a new colony system. Living conditions are now better for animals but consumers are consequently suffering the impact of this new EU regulation. In Ireland, egg prices raised by 5% only, so far.   Forecast for fish prices are not positive either. According to a recent AFP dispatch, the increasing demand and the drop of fishing quotas to protect the biodiversity will lead to inflation. For instance, cod price should increase by 15% in 2012 and 25% for the salmon from Pacific or Alaska.   In such environment, French and Irish companies must enhance their efficiency to better answer to these changes.   Source : Retail news, Mars 2012 et Le prix du poisson s’annonce salé - Agromedia , 11 Décembre 2011.

According to the French ministry of Agriculture, the agri-food trade surplus increased by 45% between 2010 and 2011. The value of the agri-food trade surplus reached €11.6 billion in 2011. Thanks to commodities such as grain (higher price), dairy, drink and meat, the growth of the French agri-food exports exceeded the growth of its imports.  The European Union has helped to boost the French agri-food sector and remains its best partner (Trade surplus with the EU: €6.5 billion, +41 %). Exports to other countries (non-EU) confirmed also the good health of the French agri-food sector (Trade surplus with non-EU countries: €5.1 billion, +50%). 2011 was a good year for both the French and Irish agri-food industries. Irish agri-food and drink exports hit a record of €9 billion (CSO estimates). Source: Les échos, Agroalimentaire : l’excédent commercial fait un bond de 45 % en 2011, 13/02/2012

According to a study led by Eurogroup Consulting and Essec Business School, French milk cooperatives will have to ally in the next few years, in order to gain competitiveness. Indeed, there is currently no French representative in the ten first European milk cooperatives, this shows that most of them did not reach the critical size to face European competition. On the contrary, Dutch or Irish cooperatives (Friesland Campina, Kerry) are extremely competitive, especially thanks to their concentrated market and to their homogeneous and small-sized territory. For the past ten years, there have been more and more mergers involving French cooperatives, including in the dairy sector. In 2010, the French cooperative Sodiaal took over Entremont, which allowed the company to enter the Belgian market and to become a European leader for the production of milk and Emmental. Because of a growing uncertainty about prices, French milk cooperatives should strengthen their synergies, and continue to invest in innovation, introducing new products with better added value. The end of milk quotas in 2015 should also allow French breeders to increase their milk production and to amortize theirs costs, becoming hence more competitive.

The secretive Lactalis finally reveals its financial records Lactalis, the secretive French dairy giant and maker of the Président brand cheese, was forced to unveil its 2010 performance in a financial report submitted to the Consob (Italian financial authority) as part of its takeover bid on Parmalat.  Indeed, on April 26th, Lactalis bade €3.4M for the 71% of the Italian food company it does not already own. If Lactalis takes over Parmalat, it will become the world’s biggest producer of dairy products. This family owned company had been able to remain opaque about its finances and was well-known for its secrecy. For instance, the last news released on its web site concerning any profits or losses is dated from 2008. On May 13th, the group announced a turnover of €9.4 billion for the year 2010. Lactalis, the third largest food group worldwide, is currently established in more than 150 countries. It realises 39% of its sales in France and 13% in Italy.  It manufactures and produces a large range of products including cheese which accounts for 46% of its turnover, milk 17% and fresh products 14%.

The sale of Yoplait, the second largest yoghurt brand after Danone, attracted multiple bids from food groups such as Mexican Groupo Lala, Swiss Nestle, Chinese Bright Food and European largest dairy group Lactalis. Finally, General Mills, one of the largest food makers in the world with operations in more than 100 countries and about €11 billion in net sales in 2010, won the bid last week. General Mills acquired for €800 million the 50 percent stake held by PAI partners and will work with Sodiaal which is retaining its 50% stake. This structure ensures that Sodiaal remains a key shareholder of Yoplait and consolidates the group’s French roots. General Mills won the deal for three main reasons. Firstly, it has had a license for using the Yoplait brand in the US for more than 30 years. Moreover, Sodiaal was also interested in the idea that General Mills could use its international reach to boost sales in emerging markets, particularly India and China. Finally, The American giant also agreed to maintain the headquarters, the R&D department and current factories in France. Source : New York Times & Reuters

PAI Partners has decided to sell its 50% share of the French yogurt maker, Yoplait, which it co-holds with the French farmers cooperative SODIAAL. Initially, 9 bidders responded to the offer including: the American General Mills, Swiss Nestle, Mexican Lala, French Axa Private Equity and Chinese Bright Food. All the offers were very close and are estimated to be around 800 M€. The highest bid came from the Shanghai government-owned food group, Bright Food, which considered the entire Yoplait company to be worth 1.6bn€. The Chinese company is planning to go global and is currently talking to other European dairy groups. Today, 7 bidders are still in the running to become Yoplait’s stakeholder. The deal is of importance for the French government as the local yogurt business is considered a “strategic national asset”. In Ireland, Yoplait has been franchised since 1973 and Glanbia currently controls the production and distribution of its products.

The end of milk quotas in 2015 will change the European dairy industry. Through the implementation of a new reform, the French dairy sector is getting ready for this upheaval. Indeed, the current departmental milk quota management system will be replaced by a new system of governance. The National strategic plan for the French dairy sector announced in September 2010 by the Ministry of Agriculture will encompass the creation of nine production areas in charge of managing milk quotas. Three times per year, each appointed Area Prefect will gather 14 representatives of the French dairy industry and 14 representatives of the French public sector in order to allocate quota subsidies and define priorities.  This reform is really well perceived in France. On a larger scale, the end of dairy quotas is leading dairy processors across Europe to associate. Two French dairy co-ops Glac and Eurial have decided to merge and create what would become the French second largest dairy co-operative behind Sodiaal.