The dairy industry in Europe faces mounting tensions as purchasing groups allegedly circumvent the regulations imposed by the Egalim reforms, sparking debate over market fairness and consumer protection. The French Federation of the Dairy Industry (Fnil) highlights a growing rift in commercial negotiations where major European buying centers, such as the Everest group representing retailers like Intermarché, Auchan, and Casino, reportedly show blatant disregard for these agricultural policies designed to stabilize prices and ensure fair remuneration for producers. This defiance threatens the equilibrium sought in the dairy supply chain, impacting not only producers but also the broader food industry and consumers.
At the core of the dispute lies the negotiation mechanism for dairy product prices. While Egalim laws aimed to foster equitable commercial relations by introducing upstream contracts taking production costs into account, the Fnil contends that centralized purchasing groups maintain pressure to keep retail prices of mass-consumed products low. This strategy benefits retailers in France while jeopardizing the margins of dairy processors and the viability of producers. Furthermore, the complex dynamic of international trade introduces ambiguity, as multinational dairy companies prefer consolidated negotiations across borders for operational efficiency, despite the risks this poses to local market fairness.
The persistent marginalization of French producers, especially when compared to their German counterparts, underscores the challenges ahead. Studies reveal that German dairy farmers benefit from higher milk prices, partly due to more flexible pass-through pricing in supermarkets and superior industrial capacity to produce mid-range cheeses competitively. The knock-on effects of these disparities reverberate through the supply chain, influencing strategic export moves and intensifying competition among dairies to retain producer loyalty.
Amid these shifts, the industry grapples with declining profit margins and supply chain fragility. According to Bank of France data, the private dairy sector’s margins are shrinking, with no significant post-pandemic recovery. These economic pressures pose a risk not only to individual players but also to the sustainability of the agricultural sector at large, prompting calls for stronger enforcement of food regulations and a reassessment of purchasing practices to uphold the principles of the Egalim reforms.
Such developments spotlight the urgent need for balance between market efficiency and regulatory frameworks that protect agricultural producers while fostering sustainable growth. As tensions rise, focus intensifies on how purchasing groups navigate and sometimes disregard the complex web of agricultural policy, with significant implications for the dairy industry’s future and consumer interests across Europe.
How Dairy Industry Claims Purchasing Groups Undermine Egalim Reforms
The crux of the current debate lies in the accusation by the French Federation of the Dairy Industry that purchasing groups within Europe are systematically ignoring the Egalim reforms, a set of French agricultural policies enacted to restore balance in the dairy supply chain. These reforms include mandatory upstream contractual negotiations aimed at better aligning product pricing with production costs to ensure fair compensation for dairy producers.
The accusation centers on the purchasing groups’ strategy to maintain retail prices of consumer goods in France while offloading financial strain onto the dairy industry’s processing sector. This approach effectively undermines the Egalim law’s intent by pressuring dairy companies to accept lower margins, imperiling their operational sustainability. The industry’s leadership reports that negotiation rooms at the Everest buying center in the Netherlands, which handles key clients such as Intermarché, Auchan, and Casino, are even nicknamed “Deflation Rooms,” signaling an aggressive stance to suppress prices at the expense of producers.
Market Dynamics Between National and International Negotiations
Considering the global footprint of multinational dairy companies such as Lactalis, Savencia, Bel, and Danone, the industry faces a complex trade-off. While the Fnil advocates for excluding French dairy products from broader international negotiations to protect domestic market interests and ensure fair producer pricing, the multinational groups see value in centralized negotiation for efficiency across different European markets.
This dichotomy creates tension: centralized purchasing groups streamline operations for multinationals but risk sidelining the principles of food regulations designed to protect local dairy farmers. Consequently, the dairy industry witnesses a fragmentation where certain cooperatives, like Sodiaal, benefit by avoiding these centralized channels, revealing competitive disparities within the sector itself.
The Economic Impact of Purchasing Group Practices on Dairy Margins and Market Fairness
The financial health of the dairy industry is intricately tied to pricing mechanisms influenced by purchasing groups. The Banque de France reports show a worrying trend: private dairy sector margins decreased to approximately +1.1% in 2024 from +1.8% in 2020. This contrasts with other agri-food sectors which recovered more robustly after the pandemic-induced disruptions.
The disparity in producer milk prices between France and Germany highlights the competitive challenges French dairies face. According to a study by the Cniel covering the first nine months of 2025, French milk prices were around 470€ per 1,000 liters, whereas German producers received approximately 520€ per 1,000 liters. This price gap is attributed to several factors:
First, German supermarkets exhibit greater flexibility in passing price increases onto consumers, effectively raising the market value of dairy products and the milk that feeds into them by an estimated 15 to 20€ per 1,000 liters. Second, Germany’s industrial capacity, particularly in producing mid-range cheeses, enables it to command an additional 10 to 15€ premium by leveraging economies of scale. Third, strategic export policies have bolstered German milk prices by another 10 to 15€.
These factors consolidate a competitive advantage for German producers, leaving French dairies navigating a tighter margin landscape complicated by supply chain pressures and an uneven competitive field between cooperatives and private groups, with implications for market fairness and consumer protection.
