Lactalis to cut 450M Litres from milk pool

FRANCE – The world’s largest dairy company, Lactalis, has announced plans to slash its annual milk collection by 450 million litres, nearly 9% of its total volume in France. 

This decision has sent shockwaves through Europe’s dairy farming community, with hundreds of farmers scrambling to find alternative buyers for their milk.

In France, 270 farmers will lose their contracts by 2026, while others have until 2030 to secure new outlets. 

The cuts target regions with low supplier density, where milk collection is costlier. Similarly, in Scotland, 12 farmers have been given a year’s notice to find new processors as Lactalis reviews its supply operations in the UK.

Lactalis, known for its extensive product range, is pivoting towards more profitable consumer goods such as cheese and yoghurts, moving away from bulk ingredients like non-fat dry milk (NFDM). 

This shift is driven by fierce competition from global players, including New Zealand, and declining demand from key markets like China.

Despite efforts to frame the move as a step toward improving farm gate milk prices by cutting production of lower-margin products, French farmers’ unions have reacted strongly. 

The National Federation of Milk Producers (FNPL) criticized the decision as a betrayal, with FNSEA, another major farmers’ organization, echoing the sentiment: “Supplying the world’s largest processor should guarantee security, not abandonment.”

Lactalis’s financial performance has been robust, surpassing US$30 billion in annual revenue for the first time in 2023. The company’s profit rose to €428 million, reflecting significant growth through acquisitions and organic expansion. 

However, its plan to process less French milk has left local suppliers feeling vulnerable, especially as CEO Emmanuel Besnier had hinted at such measures earlier this year.

The reduction in NFDM production aligns with broader EU trends, where milk processors are cutting output amid declining export prospects and competitive pressures. 

EU exports of NFDM face challenges from free trade agreements, such as the deal with New Zealand, which allows up to 15,000 tonnes of NFDM imports at a reduced duty.

In Scotland, where Lactalis operates a manufacturing site in Stranraer, affected farmers face an uncertain future. 

NFU Scotland Vice-President Andrew Connon voiced frustration: “Producers are being dropped without clear reasons and left with limited options in an already tight market. This undermines long-term investments and erodes trust in contracts.”

Sign up HERE to receive our email newsletters with the latest news and insights from Africa and around the world, and follow us on our WhatsApp channel for updates.