Speaking recently about the company’s third-quarter earnings, Saputo chief executive Lino Saputo again called on co-operatives to do more to reduce volatilty, to ensure farmers were better off.
He will address this year’s Australian Dairy Conference in Melbourne.
“It’s about time they (co-operatives) looked at ‘right sizing’ the amount of solids in the system for consumers,” Mr Saputo said.
The company reported net earnings totalled $337.0 million, an increase of $139.6 million or 70.7per cent on the same period in 2016. Adjusted net earnings totalled $183.2 million, a decrease of $14.2 million or 7.2pc. Once interest, tax and other costs were taken into account, the company earned $318.0 million, down $28.6 million or 8.3pc. Revenues for the quarter amounted to $3.022 billion, an increase of approximately $56 million or 1.9pc.
Mr Saputo said volatility would remain, while production continued to exceed market growth of one and a half to two percent, a year. “I am hoping there is going to be some leadership in this industry, on the producer side, that will understand the economics of the dairy farmer could get better, should get better, if they balance that out.”
“We don’t have a lot of influence on the co-operatives, the co-operatives have influence on the farmers. We are not a producer, we are a processor, and perhaps we don’t have the same credibility, the co-ops have.”
In October last year, Saputo entered an agreement to buy Australian dairy co-operative, Murray Goulburn (MG) for nearly $1.3 billion. In July last year, Mr Saputo said the major European and New Zealand co-operatives needed to curb over production.
“This is the pendulum that keeps moving from side to side. When the markets are good everyone wants to capitalise on them and everyone has a fear of missing out, so they put on more production,” Mr Saputo said. “And once that happens, they exceed the ability of consumers to consume production, and so it goes into inventory stock. Those inventory stockpiles are published and - of course - the buyers are not going to buy, when there is inventory stock in the system.”
He said Saputo would continue to be a low cost, efficient processor. “Revenues are up, milk intake is up, some of our competitors in both Argentina and Australia are having difficult time and we are capitalising on that,” Mr Saputo said.
Mr Saputo said he expected the Canadian government to look after its farmers and processors, under the Trans Pacific Partnership (TPP), due to be signed in early March.
“If you are going to grant so much access to the 10 other members of this TPP, to come into Canada and sell dairy products, at least let the stakeholders in Canada be able to have a strong say, by way of controlling quota. It’s only fair, if you want to maintain value in dairy.”