French law makes supermarket food more expensive

This month marks the introduction of the infamous 'Loi Alimentation' in France. The new law puts a stop to a number of promotional techniques and raises the minimum prices for a number of popular products.

 

Supporting local farmers

The story of the new food laws begins in 2016, when a study revealed that 30 % of farmers only makes 350 euros per month, putting them well below the poverty line. To ensure a fair income for the farmers, distributors now will have to lower their margins on a number of products in meat, dairy, vegetables, fruit and fish without lowering the selling price. The goal is for the farmers to receive more money for their products.

 

To compensate for the industry's 'loss', the government is also raising the 'minimum threshold for sales at a loss' for a long list of popular products. Supermarkets are no longer allowed to sell those products at the purchase price (selling at a loss was already forbidden) but they are now obligated to take at least a 10 % margin. The products in question include Nutella, Evian, Ricard, Carte Noire coffee, Coca-Cola and Président camembert: all products that are often discounted to lure customers.

 

1.4 billion euros of purchasing power lost

Newspaper Le Parisien received a list of raised prices for 24 popular products from major brands. According to them, the consumer will have to pay 6.3 % more on average. Some extremes include a 10 % hike for a bottle of Ricard pastis, + 8.6 % for Président camembert and + 8.4 % for a jar of Nutella. Consumer organisation UFC-Que Choisir had already calculated that the entire operation would cost 1.4 billion euros to the French people, and this at a time when the 'gilets jaunes' have been protesting for eleven Saturdays in a row to demand more purchasing power.

 

French Minister of Agriculture Didier Guillaume made sure to specify what the Loi Alimentation actually says. "The law does not say that Nutella ought to become more expensive, only that a supermarket must not sell its products for less than what they paid for it." According to the Minister, only 4 % of products will increase in price: "500 out of 13,000 products" in supermarkets, or "800 out of 20,000" in hypermarkets. France's largest farmers' union, the FNSEA, reassures everyone that the whole affair will only end up costing "50 cents per month per person".

 

The supermarkets themselves feel they are being held hostage by the government's actions, calling the law "a stupid move". Price fighter E.Leclerc's top executive Michel-Edouard Leclerd said: "I do not have a problem with the agricultural section and the reappraisal of our farmers' income, but you have to wonder: why do we have to raise the prices of exactly those products that do not come from agriculture but that are manufactured by multinationals? We have to obey the law, but we're going to be smart about it: we are going to increase the amount of coupons, do things that are legal and lower the prices of 4,600 products under our private label." Carrefour has already made adjustments to its loyalty programme to increase the customers' buying power.