Instead of the cattle breeder incurring a sale price for the animals, he negotiates it before any sale: he puts in place a contract for the sale of the animals.
Description of Innovation
The observation has been known for many years: the breeder sells a cow the current week, and does not know the selling price in some cases, when the animal leaves the farm. It can be paid at market price (quotation), or at market price plus added value (because the animal is brought, without it knowing it from the farm, in accordance with specific specifications such as the “Label Rouge”).
The “EGALIM2” law changes this principle: it leads to compulsory contractualization between the breeder and the first buyer.
The establishment of a mandatory contract is a real lever to ensure a fairer distribution of the final price throughout the food chain.
The breeder no longer suffers the prices that is imposed on him every week. He negotiates the price of the animals with his first buyer, according to two possibilities:
- the determined price which is fixed
- the determinable price which is based on indicators including the cost of production of thhe finisher cattle.
In agreement with the first buyer, the breeder validates a price formulation present in the contract. This negotiated price is made with the breeder, and he must ensure remuneration for his work in order to continue.
Once this price has been negotiated between the breeder and the first buyer, it is protected. This becomes the price of the raw material in the rest of the food chain. The “EGALIM2” law indicates that the price of the material is not-negotiable. For example, if the breeder has determined with his first buyer that the cow is paid at €5.50/kg in the contract, then the animal will keep this value in the rest of the food chain. It isn’t the supermarket that, together with the manufacturer, defines the prices paid to producers and the price that the raw material must cost!
Impact on farm performance
- Provide visibility on the prices that will be paid for the animals
- Provide visibility on the remuneration that the breeder will be able to obtain
- Provide economic visibility of the work on the farm over the year
- Invest more easily in the cattle farm
- Determine more easily animal husbandry practices
Signature of a three-party contract between an organization of producers, a slaughterer, and a distributor in the presence of the Minister of Agriculture Julien Denormandie, at the SIA 2022. The purpose of this contract is to set up a fair remuneration with breeders in eastern France.
In addition to this photo, the following video proposed by LIDL, goes to meet Julien, breeder of Limousine in tripartite contract with them:
Thierry Rapin, director of the FNB, describes the mechanism of contractualization between breeders and first buyer, within a meeting for breeders in the Maine et Loire department : https://www.youtube.com/watch?v=eG4Xb-WNJbM
Farmer comment (for Good Practices)
"It's been 6 years that through my producer organization, we have been working hand in hand with the Lidl teams and the industrialist ELIVIA. They have always been able to respond to our demands for fairer remuneration,” explains Jean-Philippe Thomassin, Limousine breeder and member of the APAL association.