Representatives of farmers, creameries and the government are due to start talks next week over a new milk pricing system after the French competition authority outlawed a decade-long nationwide agreement. Until last July, processors adjusted their prices quarterly following the recommendations of a national panel based on market data for key dairy products in France and in neighbouring countries.

But the competition watchdog has ruled that industry-wide pricing guidelines were illegal, leaving dairy farmers to face creameries on their own. “We no longer have the right to talk about the price of milk in France”, regrets Thierry Roquefeuil, secretary general of the country's main dairy farmers' union FNPL.

The de-facto deregulation had immediate effects. In July, Europe's leading emmental cheese manufacturer Entremont paid 31.1 cents per litre instead of the 33 cents farmers expected on the basis of the earlier agreement.

The farmers supplying Entremont, mostly based in Brittany where the company collects one third of the region's milk from 5,600 farms, tried to negotiate a higher price. The talks failed after Entremont offered farmers individual contracts setting milk volumes and prices over a period of several months – on its own terms.

The row turned into a full-on protest last week, when Breton farmers blockaded Entremont factories and warehouses. On August 28, Entremont finally agreed to pay the extra 2 cents per litre until the end of September.

“Processors now set prices unilaterally, but we won't accept to deliver milk without knowing what price we will get”, Roquefeuil told the Farmers' Journal. “Individual companies and farmers' groups do not have the know-how to negotiate without national guidance”, he added.

With processors arguing that sales are slowing down, supermarkets claiming that their margins are too small and the government calling for lower consumer prices, Roquefeuil expects more downwards pressure on producer prices in the coming months. “There is a political will behind that, a free-market notion that there has to be more competition on commodity markets, even though that means dairy farming may be confined to a smaller number of regions”, he said.

During the Entremont row, the company's chairman and CEO Christian Mazuray justified the price squeeze by saying: “It is important for us to warn our producers about a particularly poor economic context.” He added that high farmgate prices meant Entremont lost market shares to “German and Irish competitors”. Tipperary Co-Op is a key player on the French cheese market through its packing and distributing subsidiary Tippagral.

However, Roquefeuil warned that farmers would not accept dwindling prices. “As things stands, we are headed for new clashes”, he said.

The turmoil in French milk pricing happens as the country's output reaches a seasonal low. While the past year has seen a massive surge in milk production, weekly collection levels are now in line with those of previous years, around 370 million litres nationwide. Now that the cows being milked during the last quota year have dried off, price uncertainties might lead French dairy farmers to enter the new season with a smaller producing herd.

As many French farms feed animals maize grown on their own land and harvested in September, now is the time to make decisions. “If they decide milk prices are not looking good, they will switch some of the maize to grain rather than silage”, Roquefeuil said. “Across the industry, there is a consensus that there is no need to put too much milk on the market, as we are not sure there will be a market. What is the point of putting out extra volumes if it pushes the price down?”, he added.