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France’s Dairy Cooperatives Sodiaal and Dairy Masters Hit China Wall in Synutra Joint Venture which Echoes Fonterra Experience

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Problem is under “radio silence”

Sodiaal is France’s major milk cooperative and its experiences and the timing of them with Synutra, a top-rank Chinese dairy company, echoes that of New Zealand’s Fonterra with the Chinese infant food producer Beingmate.

China’s Synutra is failing to come up with its share of the money for its share in a joint venture factory (pictured) which was announced with a great fanfare only several years ago.

Sodiaal though has the advantage in that the joint venture milk factory is on French soil and not on Chinese.

Sodiaal has in common with its New Zealand cooperative counterpart Fonterra the characteristic of sitting tightly on bad news.

The French call this blanket a “radio silence.”

Thus the problems with the much ballyhooed joint venture only became apparent when the new joint-venture factory in Brittany started cutting back on supplies from its farmer-members.

French milk cooperatives share with Fonterra another characteristic.

This is that after a setback has spilled out into the public realm, often via disgruntled farmer suppliers, there has to be a scapegoat, bouc émissaire, other than the coop or China

In the Sodiaal- Synutra instance the blame ball has not travelled very far.

It has landed in the lap of Lactalis, a privately-held, secretive, widely feared dairy company, a major domestic branded fabricant, which was involved last year in a salmonella scare (“scandale.”)

The Lactalis affair is being blamed for Synutra when it comes to France, having to adhere now to the most stringent of subsequent health regimes.

.The Franco-Chinese joint venture thus again reminds New Zealand of the slippery nature of doing business in a country subject to a command economy when nobody will admit to this centralised structure, unseen hand.

Sodiaal has recourse to recover its overhead simply because the joint venture dairy factory is on its own territory in Brittany.

Also burned in another and even more recent Synutra joint venture is another French dairy cooperative known as Maitres Laitiers.

Milk Masters is not so well known as Sodiaal because it is a maker of retailers own branded products.

It invested in capital works required to position itself as supplier to the Synutra infant formula expansion drive in France.

This investment turns out to have become invalidated when after the works completion, Dairy Masters found that the Chinese required a different formula to the one originally specified.

These episodes do however go some way to soothing the chagrin of the Fonterra directorate which was rounded upon for having placed New Zealand farmer hard cash into the impenetrable Middle Kingdom.

Sodiaal and Dairy Masters milk supplier deliveries meant these cooperatives necessarily hedged by extending and customising plant production in their own country, France.

Both cooperatives share now with Fonterra the same problem.

It is how to cut their China joint venture losses.