Demo report on forward and future contracts in France

Discussions took place in France about the interest of the implementation of compulsory contractualization for the beef sector. The goal was to see if the breeders were ready to contract all the animals that leave their farms.

Approximately 20 beef farmers: breeders, fatteners ... but also players in the sector in charge of the FNSEA, JA, "La Coopération Agricole") specialized in contractual relations participated at the webinar in France.

Benefits: contracting is the only way to bring transparency to commercial relations. The contract makes it possible to give a framework to the commercial relationship and therefore, as a consequence, to enforce the law and trigger sanctions. 

Obstacles: compulsory contracting cannot guarantee good remuneration for cattle breeders. The free negotiation of prices remains in force.  This can slow down breeders in the regions, who are not used to  define a contract and even less a mandatory formulation of prices based on reference indicators (production cost, market, quality, etc.). Farmers may feel oppressed by commercial negotiations on the part of the operator downstream in the sector.

Additional costs and savings: The implementation of the contract requires time for drafting commercial relations and therefore a cost in terms of time for the breeders, or for the structures carrying the marketing of the breeders (producer organization, cooperation). This cost is essential to the functioning of the structures, and must be carried to the end of the chain.

Recommendation: Cattle breeders would recommend this measure to other European breeders because it allows better visibility of commercial expectations on their animals, better planning of their outings on the farm, better visibility on an annual profit and the possibility of controlling commercial negotiations.

Author: Marie Penn - FNB