Lactalis’s announced exit continues to urge Luxembourg to find a solution for its dairy sector. ADR MEPs Alexandra Schoos and Michel Lemaire have called on the minister for agriculture, food and viticulture, Martine Hansen (CSV), on the state aid granted to the French group and, above all, on the resources the government could now mobilise to strengthen processing capacity in Luxembourg.

In their parliamentary question tabled on 28 July, the two MPs point out that Lactalis’s decision not to renew the contracts of the 68 producers in the Prolek cooperative in 2027 affects between 10% and 15% of national milk production. They estimate the volume to be absorbed at around 50 million litres. First observation: Lactalis has received no public funding from the agriculture ministry for its infrastructure in Eschweiler over the last 20 years. This is what Martine Hansen states in her response published on Wednesday 12 August. However, an annual grant of less than €5,000 was paid until 2017 as a “contribution towards the transport of milk samples”.

An ongoing study

But the issue now lies elsewhere: what is to be done with the milk that Lactalis will no longer be collecting? Alexandra Schoos and Michel Lemaire explicitly ask whether national players, “such as Luxlait, for example”, could receive aid to increase their processing capacity and take on the volumes from Prolek’s producers.

The question directly echoes the position adopted by Luxlait back in June. As Paperjam had revealed at the time, the cooperative’s board of directors had decided to explore ways of supporting the producers abandoned by Lactalis. Luxlait had not promised to take on the volumes, but had announced an economic, marketing, industrial and technical study to assess the impact of such a move on its capacity, its market opportunities and the financial stability of its members.

The CEO of Luxlait, Gilles Gerard, emphasised at the time the need to find a long-term solution. “Our responsibility is not just to find a solution for tomorrow. Our responsibility is to find the right solution for the next 20 years, without compromising the value of our current producers’ milk,” he explained. At the time, the issue concerned around 52 million litres of milk per year and nearly 70 farms.

A new bill

Two months later, the government’s response adds a new element to this equation. On 27 July, the Government Council approved a draft bill aimed at strengthening support for the processing and marketing of agricultural products. The bill provides for an increase in the level of aid currently set out in Articles 29 to 37 of the Agricultural Act, with a view to boosting the capacity and resilience of Luxembourg’s food sector.

Martine Hansen does not, however, say that Luxlait will benefit from this aid, nor that the cooperative will take on the volumes left by Lactalis. The parliamentary response does not specify any figures or name any beneficiaries. It does, however, confirm that the government is working specifically to strengthen the financial leverage referred to by MPs in order to develop national processing capacity.

On the subject of farm diversification, the government also refers to the “National Action Plan for a Sustainable Food System”, which was presented on 2 April. A number of measures are intended to strengthen the resilience and diversification of farms, but the specific support mechanisms are still being developed in consultation with the relevant stakeholders.

The timetable is becoming tight. Lactalis is due to exit the scheme in 2027, Luxlait is exploring the possibility of being part of a solution, and the government is preparing to increase processing subsidies. But the crucial question remains unanswered: who will actually process the approximately 50 million litres of milk in question, and on what economic terms?