Pallet debris and bales of hay piled up, a giant fire to keep warm during the night and around fifty tractors stopped, in single file. Protest messages are displayed on some front loaders: “Civil disobedience” or “Let us work”. The scene took place not on a highway or in front of a prefecture, but in front of a logistics center, in Castelnaudary, in Aude, where the waltz of trucks was stopped for several days from January 23. The choice of location owes nothing to chance. This site supplies food and non-food products to Leclerc stores in the region.
Since the start of the farmers’ angry movement, mass distribution has been a prime target. The sector leader, a specialist in low prices, has seen several of its supermarkets be the subject of sweeping actions, like some of its competitors. The demonstrators are not mistaken: on January 31, commercial negotiations between distributors and large manufacturers – whose turnover is greater than or equal to 350 million euros – will end, crucial for the future of the world. agricultural. An unprecedented date since it was brought forward by one month by the law adopted last November by Parliament, in the hope of allowing consumers to benefit as soon as possible from possible price reductions.
The war in Ukraine, a turning point
Every year, the scene replays itself identically, or almost: mass distribution brands and agri-food companies come face to face to tear each other apart over the labels of yogurts and other prepared dishes that will garnish the shelves of supermarkets in France the following year. This round of annual negotiations, unique in Europe and modified more than ten times by parliamentarians in the space of two decades, came to light two years ago, when inflation exploded. In April 2022, the government decided to deviate from the regulations in force by reopening the period of talks, with the aim of responding to the sudden increase in the cost of raw materials and energy, a direct consequence of the war in Ukraine which had broken up a few weeks earlier.
“Until now, we had a system which guaranteed a certain price stability all year round. For the first time in a long time, an international crisis has modified the purchasing conditions of a certain number of products”, recalls a government advisor. In less than a month, the price of wheat jumped by almost 40%, while that of gas rose by 90%. “No one was prepared for that. Companies applied price increases of 15%, perfectly justified, otherwise they were heading straight into the wall,” remembers Jean-Philippe André, president of the National Association of Food Industries .
The negotiations reopened, the first tensions appear. Pressured by the Ministry of the Economy, the different players ended up agreeing on several price increases. The sanction for the consumer is not long in coming. In November 2022, food inflation reached 11.7% year-on-year. It will peak at 15% over one year in April 2023. In shopping carts, households arbitrate. Products of French and organic origin, more expensive, are neglected. “Consumers are quite schizophrenic: they say they are eco-friendly on Sundays, promising to buy French, but do quite the opposite on Monday. It’s a real social issue. In the end, it’s the farmers who pay the price “, points out a manager from Bercy. For Thierry Pouch, economist from the Chambers of Agriculture of France, “the consumer has a role to play. We must convince him that the product he buys is of quality, that it is territorially marked and that it is based on a expertise”.
Distributors with a strong presence in the media
A few months later, the situation reversed. The cost of raw materials is falling and distributors are throwing all their weight behind putting manufacturers back at the table. “When the Ukrainian conflict began, we immediately agreed to resume negotiations. The reciprocal, subsequently, did not prove to be true”, regrets today Jacques Creyssel, general delegate of the Federation of Commerce and distribution. Faced with galloping inflation on the shelves, which forces many students to resort to food aid, Bercy is showing its muscles. If some players in the agri-food industry end up agreeing to price reductions, several behemoths – Coca-Cola and Pepsi in the lead – refuse. From “name and shame” to taxation, threats are coming from Bruno Le Maire’s side, without materializing. The large groups, most of them international, are not giving in.
At the same time, brand owners, led by Michel-Édouard Leclerc, are taking to the TV sets to denounce the practices of manufacturers who have allegedly greatly inflated their margins. “Are the distributors, who have become the voices of consumers in the mornings, the white knights, as they like to define themselves? I doubt it. It’s true that they have low margins, but their negotiating power is very strong and they put immense pressure on the two links upstream of the chain,” assures a former minister. “The distributors’ position on purchasing power is quite natural. If they increase their prices, the sanction in terms of attendance is immediate. This is why they speak out publicly and are systematically suspicious on increases”, underlines Olivier Salomon, sector specialist at the consulting firm Alix Partners.
The farmer, an adjustment variable?
But by wanting to participate too much in the price war, the brands condemn the operators. “We don’t count our hours, we never complain about our working conditions… I can’t stand advertisements that promote low-cost food,” says Sandrine Le Feur, Renaissance MP and organic farmer in Finistère. “The director of a large agricultural cooperative told me a few years ago: “Luckily I also sell fertilizers and livestock feed because I systematically lose money when I negotiate with Carrefour, Leclerc and company,” says a business leader. A major French industrialist, known for his commitment to producers, agrees: “When we see the state of French agriculture and the difficulty in renewing generations, it is not desirable to return to a totally deflationary policy.”
The system of trade negotiations is grinding its teeth today, and recent successive crises have greatly weakened it. “This process has always been dysfunctional. We are the only country in the world to apply it. When I am in Spain and I talk about it to my colleagues, they burst into laughter. We are always in endless discussions with , at the end of the day, a permanent opacity”, confesses the boss of a major brand. For consultant Olivier Salomon, the system is “quite relevant for manufacturers because it is supposed to offer predictability”, but “in use, the players know the tricks and drag it out: they know that everything depends on the last weeks.”
And the farmers in all this? To protect them during these negotiations, Parliament adopted the Egalim laws. They guarantee, theoretically, part of their income, for example by making negotiations on the cost of agricultural materials impossible. In reality, it’s more complicated. “There is feedback from the field according to which the texts are not applied”, we recognize in the office of Bruno Le Maire. In the coming weeks, the Directorate General for Competition, Consumer Affairs and Fraud Control will double the checks. “The subject remains complex. The line until now was to control but not to drop the ax because violations of the law were not always intentional,” we add to Bercy. Otherwise, the fine could rise to 2% of turnover. The hunt is on again. But the regulatory thicket is thick, and the big game bears little resemblance to a partridge of the year.
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