If we have published a lot (1) on our vision of equity and solidarity in and with the company, including on our blog RémiG DPP (see in particular the article “Ideal remuneration model in companies”), the news of the milk and meat sectors leads us to come back to our approach of the equitable distribution of added value in the food sectors. The following is therefore inspired by the treatment proposed in the book "Proposals for a fair economy" (2).
Proposal of an equation for economic equity
The inequity is particularly evident in the case of the producer-consumer sectors for which producers subject to borderless competition and the behemoths of the distribution, where earthen pot against iron pot fight, via intermediaries who do not want letting go or losing anything, via dictates from elsewhere. And the news is regularly responsible for showing the reality of our allegations even dramas thus generated ...
Our suggestion seen through the farmer-producer of milk ...
The first of the "milk" and derived products food chain (and which does not make the "weight" to negotiate the price of its own raw materials: fertilizers, hydrocarbons ...) must receive, in all circumstances, that is to say brought "structurally", in a legislative way, the guarantee of a minimum profit B1 due to its work in connection with the totality of the profit realized by "its downstream".
Thus, calling Pc is the price for the final consumer of milk, Pf the minimum sale price of the farmer - producer, C his cost price salary includes, B1 his minimum profit (Pf = C + B1) and Bn-1 the totality of the downstream profit, setting λ the value compared to the downstream added value, ie λ = B (n-1) / (Pc-Pf), then the minimum profit B1 to be guaranteed - in our opinion - for the farmer - producer would check B1 / (C + B1) = λ, that is:
B1 = C.λ / (1-λ)
And Pf = C + B1
(And, calling Bn all the profits of the sector one would always have B1 / (C + B1) = B (n-1) / (Pc-Pf) = Bn / Pc = λ)
A numerical example:
If C = 0,5; Pf = 1; Pc = 2; B (n-1) = 0,25
Then λ = 0,25 / (2-1) = 0,25
And B1 = 0,25 x 0,5 / 1 - 0,25) = 0,166
(Bn = 0,5)
And Pf = 0,5 + 0,166 = 0,666
We then observe that, according to the suggestion, the value of B1 increases with the cost price C and with the value of the "downstream" benefits. The system allows the farmer-producer to encourage the quality challenge, avoids abuses of the "downstream" margin achieved to the detriment of the first supplier in the chain, while leaving the latter the freedom of his strategies optimization for its production cost C (play the qualitative against the quantitative etc.).
At the same time the device lends itself to a formal administrative control (a posteriori).
(2) See ed. Harmattan "Proposals for a fair economy" (R. Guillet. 2012 and e-book version in 2015)