The agricultural world caught by the throat by the explosion in production costs linked to the war in the Middle East

The FNSEA, the main agricultural union, is calling on Wednesday May 20 for the reopening of commercial negotiations between manufacturers, farmers and large retailers. A request made possible by law, but the brands must still agree to it. For the moment, Carrefour, Système U or Auchan are in no hurry. During traditional negotiations at the start of the year, concluded before the military escalation in Iran, they obtained relatively low prices. Today they have no desire to reopen the case and assume the soaring costs.

For farmers, the situation is becoming untenable. They are bearing the brunt of the rise in the price of gas, fuel and in particular GNR, non-road diesel. According to the FNSEA, this represents several thousand euros in additional costs per operation. And the pressure doesn’t stop there: packaging has jumped by 45%, while fertilizers, essential for the sector, have also seen their prices explode. A significant part of these fertilizers is produced or transits through the Strait of Hormuz, directly affected by geopolitical tensions.

The consequences are already visible in several agricultural sectors. For cattle breeding, the additional cost now reaches 45 cents per kilo of carcass, according to the FNSEA. In the dairy sector, the increase is estimated at 19 additional euros per 1,000 liters of milk produced. The giant Lactalis had already warned, a month ago, that it would pass on these increases to butter, cheese and milk sold in stores. For the farming community, there is therefore an urgent need to review prices.

For the moment, consumers have still been relatively spared. Food inflation is around 1.3% according to INSEE, while energy inflation exceeds 14%. A sign that cost increases have not yet been fully passed on to the shelves. But if the crisis persists over time, the position of large retailers could become difficult to maintain.

Moreover, Michel-Édouard Leclerc himself suggested that certain contracts would undoubtedly need to be reviewed. For its part, the government is also calling on brands and agri-food manufacturers to reopen negotiations “on a case by case basis”.