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Index Input Costs in French Agriculture

09 March 2011

The new president of the national federation of farmers' unions (FNSEA), Xavier Beulin has advocated indexing input costs as a buffer against such phenomena as soaring cereal prices, reports Peter Crosskey.


President of the national federation of farmers' unions (FNSEA), Xavier Beulin

"If you look at the bottom of an airline ticket, you will see that it is indexed against the price of kerosene. Why not food?" Mr Beulin asked the audience at a round table organised the French food industry correspondents' association SYRPA during the French agricultural exhibition, SIA, last week.

The FNSEA is effectively querying the validity of auction sales as a measure of the resources invested in animals that go to market. Others in the meeting, notably the French retailer on the platform, were sceptical that French farmers could persuade the rest of Europe to adopt such a system.

Mr Beulin, however, remained bullish: "If we have a system that isn't working, then we have to look for alternatives," he told TheCattleSite as the meeting broke up.

French LMA and Incoterms

The agricultural landscape in France faces a sea change as the Law to Modernise Agriculture (LMA) starts to take effect.

With negotiated contracts high on the agenda, next month will see the beginnings of contractualisation in the cattle sector, quite possibly on the basis of economist Philippe Chalmin's fudged analysis (See our previous report on the Chalmin report by clicking here).

More significantly, the LMA also envisages that at some point in the future, food will only be transported with full documentation, including a copy of the contract under which it is produced.

A significant difference is that the most recent Incoterms structure can now be applied to consignments of goods transported within the same country.

While the Incoterms landscape is shaped by a need to accommodate the differing expectations of the US and Chinese traders, the domestic application of Incoterms stems from the US Bioterrorism requirements.

Although Incoterms have not featured prominently in French discussions of domestic trading, there are nevertheless signs of moves in this direction.

The medium term result is likely be a sharper focus on the ownership of goods in transit in future roadside confrontations.

That will not be a minor change in the French rural landscape, where the law has not always been rigorously applied.

France Predicts Fewer Pig Holdings This Spring

"There will be 10-15 per cent fewer pig holdings in France by the end of March," predicts the president of the French pig producers' federation the Fédération Nationale Porcine (FNP) Jean-Michel Serres.

Speaking to TheCattleSite at the Paris international farm show SIA, he added: "What we won't know in the short term is the proportion of farms that will have joined up with co-ops, which ones changed activity, consolidated in some other way or gone out of business."

As a result, it will be difficult to predict the effect on the number finished pigs in the coming year. "Although it will probably slow down," predicts Serres.

In a strained and uncertain atmosphere, groups of pig famers in the west of France have resorted to random checks, stopping and searching refrigerated lorries. They are searching the loads and discarding pigmeat products which are not stamped with the French pigmeat quality mark VPF (Viande Porcine Française).

"The VPF label is a positive way of identifying French pigmeat, whereas in the past you would see retail products, notably charcuterie, labelled 'packed in France' or 'processed in France' with no commitment as to its origins."

In December, the pig industry and a number of retail partners signed an agreement to give promote the VPF label.

"Our members are helping to speed up the adoption of something that our retail partners already support," observes Serres. For all the producers' zeal, French 2010 imports of pigmeat rose by 3.3 per cent year on year to 622,000 tec according to figures published by MPB; production increased by 0.3 per cent (2.85 million tec) and consumption by 0.6 per cent (2.17 million tec), leaving a 1.7 per cent lift in exports to clear some space on the domestic market by placing 730,000 tec abroad.

In addition to private storage, which is buffering stocks and availability, Serres sees the world market showing signs of firming. An imminent point of convergence with the Americas comes in news from pig markets across the Atlantic. "Prices are rising in the US and Brazil, which will help EU exports to compete," explains Serres.

However cereal prices remain an area of concern in France as elsewhere: "Back in June or July last year, nobody was expecting the steep rises that we've seen during the life of just one production cycle," Serres remarks. In France there have already been predictions of physical shortage of cereals in the summer months ahead of northern hemisphere harvests. Asked about these forecasts, Serres nodded gravely: "That could be very, very dangerous," he warned.

Regional Branding

For producers of regional charcuterie, identifying French pigmeat is straightforward.

"Every French abattoir stamps every primal on a carcase to clearly identify its provenance and the batch details," explains Pierre Emmanuel Brotelande, export project manager at the Consortium du Jambon de Bayonne.

"The fresh legs that we buy in carry a stamp from the abattoir that is retained right the way through to the finished product."

The consortium sources legs from a designated catchment area of the south west of France, between the Poitou Charente and the Pyrenees.

Since traceability and regional identity are both central to the Jambon de Bayonne image and branding, the consortium has no issues with the producers' actions.

March 2011

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