Saputo says co-ops need to do better

13 Jul, 2017 12:36 PM
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Lino Saputo says he believes dairy co-operatives, particularly those in the European Union and New Zealand, have been excessive in their production.
We are looking for as much (milk) as is available,
Lino Saputo says he believes dairy co-operatives, particularly those in the European Union and New Zealand, have been excessive in their production.

Saputo chief executive Lino Saputo Jnr says the Canadian-based dairy giant is “hungry for other assets.”

Mr Saputo, who was in Australia this week to talk to Warrnambool Cheese and Butter (WCB) suppliers and management, said Saputo had low debt and the ability to take on another $3.5-$4 billion in debt to fund acquisitions.

Saputo this year gained 100 per cent ownership of WCB after securing majority control in late 2013.

While Mr Saputo said the company was not looking to buy the struggling Murray Goulburn (MG) dairy processor cooperative, it was looking at any dairy company throughout the world that had suitable assets for sale.

If those companies had a sale process underway, Saputo was willing to be part of the process, Mr Saputo said.

He said he did not want to speculate on MG’s “demise.”

MG has lost significant milk supply, with a large volume of it going to WCB, since it angered its suppliers by slashing its milk price in April last year.

Mr Saputo said interest had been shown in sending an additional 250 million litres of milk to WCB, much of it to supply the recent $40 million expansion in WCB’s Allansford cheese plant.

“We are looking for as much (milk) as is available,” Mr Saputo said.

“There is no limit to how much milk we can take on.”

On the global dairy market, Mr Saputo had a shot at the performance of major international dairy co-operatives, such as the New Zealand–based Fonterra.

“I think the co-operatives need to do a better job,” Mr Saputo said.

He believed dairy co-operatives, particularly those in the European Union and New Zealand, had been excessive in their production.

If the global industry could find the “sweet spot” that matched supply to demand, there would be more continuity in the prices paid to Australian milk suppliers, Mr Saputo said.

“That is in the hands of the five major dairy industry companies,” he said.

Saputo was last year ranked as the ninth largest dairy company in the world and Fonterra as the fifth largest.

Mr Saputo said he felt “the pain” that Australian dairy farmers were experiencing because of the current low prices. He said he would like to see dairy farmers paid more because if they were not making a profit, “we do not have an industry.”

Mr Saputo will this week meet with WCB suppliers at meetings in Ballarat, Vic, Mount Gambier, SA, Cobden, Vic, and Warrnambool, Vic.

He said the meetings were to hear first-hand from suppliers “whether we are doing a good job or not.”

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