Analysis Dairy cooperative Sodiaal
How Sodiaal got on a collision course with dairy farmers
The French dairy cooperative Sodiaal has lowered the milk price for November. This has gone completely wrong with the members, because according to them the milk price of Sodiaal was already hopelessly behind the rest. Dairy farmers dumped car tires at various Sodiaal factories last week, as French farmers often do when they are angry. The relationship between the members and the cooperative seems to have cooled down more than ever.
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Milk prices have been lagging all year long a headache file for French dairy farmers. While prices in surrounding countries have risen sharply, processors in France are reluctant to implement increases. In particular, Sodiaal, the third largest milk processor in France, is under fire. Angry members of the dairy cooperative have sought redress from the board several times. This summer, some members even barged into a board meeting to make their point. Now it's wrong again.
Countless protests
Sodiaal has implemented a reduction from €3 to €425 per 1.000 liters for November. Although the reduction is limited, members cannot contain their anger. They had long since given up hope of an increase, but a reduction is a rude awakening. Several dozen dairy farmers demonstrated last Thursday (November 10) in front of the factory of subsidiary Yoplait in Le Mans, after the price was announced. Autobahns were dumped in front of the gate and protest slogans were chalked on the asphalt. The members also try to involve the French population in the discussion by posting pamphlets on roads to indicate that they are being squeezed out by Sodiaal, their own cooperative.
In the meantime, Sodiaal's management is trying to calm the discussion. She promises improvement for 2023 with a milk price of at least €500 per 1.000 liters. After a long silence, CEO Jorge Boucas told his story in the French media last week. He promises a quick recovery. In an interview he states that the 17.000 members expect a further increase in the milk price, although he does not deny that Sodiaal is noticing the consequences of high inflation. However, the reduction for November is at odds with the beautiful promises that many members no longer believe.
Kees Gielen left
Until recently, there was a former celebrity of FrieslandCampina Kees Gillen in the management at Sodiaal. He has been CFO since 2018, the same position he held at the Dutch dairy giant at the time of the merger around 2009. Inquiries with Gielen reveal that he has left Sodiaal and - apart from some consultancy work - is retired. He understandably does not want to say anything about the financial situation at the French dairy cooperative. However, there is a lot to do about Sodiaal's financial affairs. Dairy farmers suggest that Sodiaal is in a bad position and is therefore paying a low milk price.
This cannot be directly deduced from the recent annual results. In 2021, the company reported a seemingly solid Ebita (earnings before interest, taxes, depreciation and amortization) of €132,5 million, from revenues of €4,8 billion. This was slightly higher than in 2020 and also in line with previous years. The net profit amounted to just under €10 million. Although this amount is relatively low for a billion-dollar concern, Sodiaal is not loss-making. However, according to dairy farmers, there is an optical deception that they have to pay for. The idea is that the milk price will be squeezed just enough to keep the company out of the red. Be that as it may, the impasse between Sodiaal and its members has never seemed as great as it does now.