A certified organic farm has higher production costs and during the conversion period, those costs are not offset by the additional revenue generated by organic products. Convinced that there should be more organic products on the market and that they should be accessible to the majority, LSDH (Laiterie de Saint-Denis-de-l’Hôtel, an independent company based in Orléans whose origins are in the dairy sector and that specializes in the processing and packaging of all kinds of aseptic and refrigerated liquid foods) signed a partnership agreement with the “Magasins U” supermarkets, to enable fair payment to the farmers while allowing greater availability of organic milk for the consumers.
LSDH and SYSTEME U commit to a fair and shared development of organic milk
5. Fair Operating Practices
- Providing fair payment to organic milk producers while remaining competitive
- Encouraging local production thanks to the development of a short marketing channel
- Promoting organic farming
As an ardent defender of French farming and milk from the Centre region, in 2011, LSDH signed a partnership agreement with BIOLAIT, a group of independent French producers of organic cows' milk and the Système U supermarket chain to provide organic milk for the U organic brand. Producers undergoing conversion received three cents per litre of milk sold, enabling 30 conversions in one year.
Under this agreement, Système U commits to purchasing a certain amount of organic milk from BIOLAIT, amount assessed based on market demand and on the amount of conversions needed to meet the demand: 5 million litres in 2011.
For every litre of UHT semi-skimmed organic U Bio milk sold 0.99 euros
· 0.34 euros are dedicated to transport, to the bottle and to processing,
· 0.05 euros are dedicated to VAT,
· 0.17 euros are dedicated to charges and to compensation for Système U supermarkets’ (to cover salaries, rent, operating expenses…),
· 0.43 euros to compensation for the milk producers.
This innovation in the dairy sector takes place within the framework of support for the development of a responsible agriculture:
· respect for producers through fair pay for their work,
· setting up a fund to help producers undergo organic conversions,
· respect for consumers through a product that meets their expectations in terms of health, naturalness, authenticity and localness.
LSDH strongly favors local quality sourcing regardless of the better prices they could achieve thanks to the purchase of cheaper raw materials abroad. Proof of this: the company’s milk brands “Lait d’ici” and “Lait Centre Val de Loire”, as well as the important work undergone with French agricultural sectors, such as soya or apple.
CONTRIBUTION TO COMPANY PERFORMANCE
- Increase in the sales of organic milk
- By the end of December 2012, the group of producers had sold 13 million liters
- Respect for natural ecosystems