The end of quotas implies getting to grips with a market economy which is very different from the administered framework to which we have been accustomed. The relationship between producer organization and processor is a customer-supplier partnership designed for the long term. Receptiveness, mutual respect and confidence are essential to

developing a constructive dialogue, finding solutions and inventing mechanisms that are adapted to the new dairy environment. Helping young farmers set up is a major challenge. In the volatile world of the end of quotas, they need visibility to have the confidence to invest. The measures taken in collaboration with the Group go in the right direction.

CHRISTOPHE TINNIÈRE Spokesman for 12 of the Group s producer organizations

President of Fromagerie Perreault s producer organization

A REGULAR DIALOGUE We engage in regular dialogue with our producers, in particular via information briefings and question-and-answer sessions, open days organized on the farms we work with and technical documentation complemented by a quarterly bulletin for our French milk producers (8,000 copies).

CONTRACTUAL RELATIONSHIPS In preparation for the end of milk quotas in Europe on April 1, 2015, milk processors in France have been invited to contractualize their relationships with producers.

Since 2012, 15 producer organizations, representing several thousand farmers, have been created around our plants.

A master contract has been signed between each subsidiary and each producer organization together with operational contracts specifying each producer s commitment to its local dairy.

Each contract is signed for a 7 year period and covers the management of milk purchase volumes, the mechanism for determining the evolution of milk price, quality specifications for milk produced and definition of the associated controls.

The agreements were finalized in 2014: production volumes will be determined on the basis of quarterly forecasts taking into account market perspectives; provisions have been included to provide visibility for young new farmers.

FACILITATING THE INSTALLATION OF YOUNG PRODUCERS

The master contract provides in particular for a 7 year operational contract renewable for 5 years, a minimum milk allocation of 100,000 liters, financial support, a 3 year guarantee of margin for the newly installed farmer and continuing professional training.

GOAT MILK AND CHEESES: FRANCE AT THE EUROPEAN FOREFRONT France is the No. 1 European goat milk producer and represents a third of all production. 80% of the goat milk collected, as much as 460 million liters, is delivered by 3,000 goat milk producers.

The Poitou-Charentes and Pays de Loire regions account for more than 70% of France s national production. France is also the No. 1 producer and No. 1 consumer of goat milk cheese. Its natural and authentic image exerts powerful attraction on young people of under 35 and consumers have given French manufacturers a plebiscite: two major cards for the future of the industry.

20 million liters of ewe milk per year are collected from 480 producers in the Pyrénées-Atlantiques region of France, between mid-November and the end of August.

SEASONAL COLLECTION OF EWE S MILK

2014 Annual Report 11