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Lactalis, French milk producers fail to reach price deal

PARIS - Europe's largest dairy group Lactalis and French milk producers failed to reach agreement on raising milk prices after 10 hours of talks on Thursday and producers said it was now up to Lactalis to come up with a new offer.

European dairy farmers are struggling with a slump in milk prices caused by oversupply after the European Union scrapped quotas last year, Russia's ban on Western food imports and weak Chinese dairy imports.

Family-owned Lactalis agreed on Tuesday to renegotiate the price paid to its suppliers after hundreds of milk producers protested at its headquarters in northwestern France, blaming the company for paying less than its competitors.

Lactalis, which currently pays 257 euros ($290) per 1,000 litres, said in a statement on Friday it had offered to raise its price by 15 euros as of Sept. 1, bringing it to 272 euros per metric ton.

But farmers said the proposals made at the meeting, which had begun early on Thursday afternoon and ended around midnight, were not enough.

"We're wondering if Lactalis is really committed to working this out," Florent Renaudier of the FDSEA farm union said.

Producers had started the negotiations asking for an average price of 290 euros ($328) per 1,000 litres over the whole of 2016, compared to Lactalis's offer of 265 euros, three sources familiar with the matter, who did not wish to be identified, said.

Farmers' requests meant Lactalis would need to agree to price rises to around 335 euros/1,000 L until the end of the year to compensate for current low prices, according to estimates by the milk producers' union FNPL.

Unions say farmers' cost of production is between 330 and 380 euros per 1,000 litres.

FDSEA's Renaudier said producers would return to the negotiating table if Lactalis came back with a new price. Lactalis said it remained open to negotiations but accused farmers of digging in.

"Despite their statements, the unions have not sought a solution to the crisis but to extend their actions in a high profile standoff hurting the group's image," Lactalis said.

Agriculture Minister Stephane Le Foll called on both sides to resume negotiations as soon as possible.

"The price paid to producers by Lactalis, the world's leader in the market cannot remain the lowest in the market, a step forward is needed," the ministry said in a statement.

Hundreds of farmers protested late into Thursday night, parking 200 to 300 tractors in the town of Laval, where Lactalis has its headquarters, awaiting the results of the talks.

They said they were ready to continue the protests if a deal was not reached.

Lactalis mainly produces cheese, milk and butter with brands including Président, Bridel, Galbani and Lactel.

Lactalis said earlier this week that it faced strong competition elsewhere in the European Union where milk prices have fallen more steeply than in France over the past year.

Le Foll said he would put forward on Tuesday a wider plan on the implementation of EU measures to limit milk output.