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Supply Chain Agrees To Control Price Volatility

by 5m Editor
9 May 2011, at 10:55am

FRANCE - Last week, Bruno Le Maire, Minister of Agriculture, Food and Fisheries, met representatives from producer, processor and retailer groups to discuss the volatility of commodity prices in the livestock sector.

Under a voluntary agreement, all these players have pledged to open negotiations on conditions of sale of products derived from cattle, pigs and poultry, due to the recent excessive variation in the rise and decline in food prices.

The negotiation will focus on pigs, young calves, heifers and oxen as well as products from these animals: carcases, fresh meat, ham and meat curing products, and whole birds and cut.

This negotiation occurs when two conditions are simultaneously met:

  • A large change in price of feed. This variation is measured by the price index for food simple or compound purchased by farmers (IPAMPA feed) for cattle and hogs and the price index of raw materials purchased by manufacturers / manufacturers of food (ITAVI) for the poultry sector;

  • A change from the excessive cost of food in the price of the product at the production stage. This development is measured by the ratio of price indices of pigs, cattle and IPAMPA corresponding index and the ratio of output price index for slaughter poultry meat and ITAVI index.

Mr Le Maire said that this voluntary agreement is complementary to a similar process initiated by upstream operators: storage agencies, manufacturers of animal feed to reduce the sharp fluctuations in commodity prices for farmers. It will be operational by 1 July.

"This agreement empowers players to avoid predatory pricing in a situation of soaring commodity prices, as the code of trade sanctions and allows the reverse to benefit consumers in periods of decline.

"It is also part of the strategy that is internationally under the G20, to fight against price volatility in agricultural commodities," he said.

Signatories to the voluntary agreement are: the National Federation of Farmers Unions, the Young Farmers, the Federation Nationale Bovine, Porcine National Federation, the Confederation of French Poultry, National Federation of Industry and Trade of Meat Depot, the National Union of Meat Industry-National Union of Pork Trade, the Federation of Agricultural Industries, Coop de France, the French Confederation of Commerce Business to Business, Leclerc, Intermarché and Business Federation Trade and Distribution representative brands including Système U, Auchan, Carrefour, Lidl, Aldi, Cora and Casino.