Lactalis to cut French milk processing by 9% amid global market shift

CANADA – Lactalis, a major Canadian dairy company, has announced plans to reduce its milk processing volume in France by 9%, (450 million liters) annually, as part of a strategic shift to reduce its reliance on international commodity markets.

According to the company, the reduction will take effect progressively through 2030 and is expected to impact the company’s processing of surplus milk, which has traditionally been sold abroad as bulk commodities like milk powder. 

The move aims to focus more on high-value consumer products such as cheese and yogurt, which the company says could lead to better farmgate prices for dairy farmers. 

According to Serge Moly, Lactalis’ supply director, surplus milk valuation is often low and subject to global market volatility, making this shift essential. However, the decision has raised concerns among French dairy farmers. 

The French National Dairy Farmers’ Union (FNPL) criticized Lactalis, stating that this plan could further weaken the French dairy sector. 

Arnaud Rousseau, leader of France’s largest farmer union FNSEA, echoed these concerns, warning about the uncertainty surrounding milk collection for producers amidst declining livestock numbers in France, the EU’s largest agricultural producer.

Lactalis’ decision comes amid mounting pressures in the global dairy market. The sector has been affected by decreased demand from China, growing competition from countries like New Zealand, and China’s ongoing anti-subsidy probe into EU dairy products. 

This probe is seen as a response to proposed EU tariffs on Chinese electric vehicles, adding another layer of complexity to the international dairy trade.

As discussions with French producers are anticipated, Lactalis aims to manage the transition carefully, ensuring that the volume cuts do not severely disrupt local farmers. 

Nonetheless, with France facing challenges in its agricultural sector and a delayed rollout of government support measures due to recent elections, concerns about the future of French dairy production remain heightened.

Despite these challenges, Lactalis continues to dominate the global dairy industry, maintaining its position as the top dairy company in Rabobank’s annual Global Top 20 report, becoming the first company ever to exceed US$30 billion in annual dairy-related revenue. 

However, growth has slowed compared to previous years, reflecting broader challenges in the global market.

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