Talks continue

NÖM and Spar: “stalemate” in the price conflict

According to experts, the price conflict between MGN Milchgenossenschaft, co-owner of NÖM, and the Spar supermarket chain has led to a "stalemate".

(Bild: APA/EVA MANHART)

Wifo economist Franz Sinabell sees a "stalemate" in the trial of strength between MGN Milchgenossenschaft, co-owner of the NÖM dairy, and the Spar supermarket chain over prices for dairy products. 

In his opinion, the parties each see themselves in a strong negotiating position, which is the reason why they are signaling toughness to the outside world, Sinabell told APA. For the agricultural expert, the arguments of both sides are understandable.

The farmers of MGN Milchgenossenschaft Niederösterreich, suppliers and co-owners of the NÖM dairy, had declared a delivery stop for dairy products to Spar due to faltering negotiations on prices, which is upheld for products with the NÖM logo. The dairy will continue to supply Spar's own brand. Negotiations are being conducted between Spar and NÖM.

Higher prices, tighter supply in Europe
The trigger for the conflict, which has also been aired in public, is the development of milk producer prices in Europe, explained Sinabell. "Farmers are guided by European milk prices. And of course they want to share in the latest increases. However, if the dairies are unable to sell the farmers' milk to food retailers at higher prices, but at the same time have to contend with increased labor costs, then the dairies are in trouble."

In addition, there is currently a slight shortage of dairy products on the European market, which is partly due to the spread of bluetongue disease in several countries. Not only is the milk price reacting comparatively sensitively to this, but dairies also have other potential sales channels open to them - also a possible pressure point in negotiations, according to Sinabell.

For the dairies, which compete with each other, it is ultimately also about keeping their suppliers (the farmers, note) in line. It is therefore in their interest to achieve higher prices for them, which they prefer not to have to shoulder themselves.

Lower prices for animal feed and energy
From Sinabell's point of view, Spar's line of argument is also logical. This is because the prices for animal feed have actually fallen in the recent past, as argued by the retailer. Energy sources have also become cheaper again. Spar had justified its rejection of a significant price increase on the entire NÖM range with this very cost development, among other things.

For the observer, "both lines of argument are therefore plausible". However, Sinabell points out that "both sides do not publicly argue with all cost components, but only with those that plausibly represent their own point of view". This is comparable to collective bargaining, "where each side enters negotiations with different, plausible arguments". In any case, none of the parties involved can have an interest in a long-term blockade.

Talks continue
The agricultural economist is not surprised that NÖM continues to supply products for Spar's own brand. "I assume that there are contracts in place that are advantageous for both sides. It therefore makes no sense for either side not to fulfill them," he assumes.

When asked by APA about the current status of the negotiations, Spar said that talks are ongoing. A spokeswoman did not provide any details.