French Government Names Economist Philippe Chalmin to Study Food Prices

Philippe Chalmin, an economics professor at the University of Paris-Dauphine, was named as head of a French government group that will study the relationship between food prices at farm level and in supermarkets.

The so-called observatory on the formation of prices and margins for food products will produce a first comprehensive report in spring of next year, Agriculture Minister Bruno Le Maire said at a press conference in Paris today.

“There are strong tensions in the agri-food industry between producers and processors,” Le Maire said. “From a point of social cohesion, it’s important that we have the whole truth on food prices.”

French farmers last year blocked dairy plants and supermarkets to protest milk prices that they said were too low to cover costs. France’s only pig exchange last month postponed trading twice in two weeks after farmers and slaughterers failed to agree on a price to cover surging feed expenses.

“Transparency, the whole truth, will allow for easing of this tension,” Le Maire said. The aim is for the observatory to provide monthly updates on food-price formation, he said.

Consumers fail to understand why milk prices remained unchanged on store shelves when dairy farmers complained of falling income, according to Le Maire. A priority will be a report on price formation for livestock products, where farmers are encountering the “biggest problems,” he said.

Burden-Sharing

“The cost of feed is exploding, notably because of the increase in cereals,” Le Maire said. “The burden has to be equally distributed,” and currently farmers “are bearing all of it,” the minister said.

The observatory aims to create transparency on food-price formation, Le Maire said. Food prices are among the hardest to understand because raw materials are diverse and production is complex, he said.

Pigs at the Marche du Porc Breton in Plerin, France, traded yesterday at 1.121 euros ($1.55) a kilogram (2.2 pounds), up 8.9 percent from a year earlier, while the cost of corn has jumped 65 percent in that span. The meat-price index of the United Nations’ Food and Agriculture Organization was at 138.3 points in September, up 17 percent from a year earlier.

“The market economy, the free economy, cannot function in opacity,” Chalmin, a professor of economic history, said at the press conference. “Collecting agricultural prices is not a problem, collecting food prices is not a problem. Putting the finger on what happens in the middle is the challenge.”

World food prices rose to a two-year high in September as costs for grain and sugar surged, the FAO said this month. Its overall index of food commodities climbed to 188.2 points, the highest level since August 2008.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net.

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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