With some dairy suppliers signing on to supply Coles and Woolworths private label $1.00 milk, despite growing Asia export demand for milk products, Saputo International chief executive Lino Saputo Jnr has slammed Australia’s supermarket duopoly for selling milk cheaper than water.
At a Rabobank leadership dinner in Sydney, Mr Saputo said that he found the discount pricing of milk in Coles and Woolworths at a low $1 a litre “mind-boggling and baffling”.
It doesn’t make sense that the processors are trying to beat each other at buying, collecting and processing the milk, and then give away a valuable product at below cost, Mr Saputo said.
“Since arriving here we’ve seen retailers and processors that are sometimes less than responsible in their actions, and not giving farmers a fair value for their product is not a game we are prepared to play,” he said.
The low prices paid for milk in Australia confirmed his firm’s decision to focus on WCB producing value-added products.
Mr Saputo said that he aims to lock-in the existing 900 million litres supplied annually by farmers in south-west Victoria for WCB’s Allendale processing plant, and is looking to grow the business.
Canada’s Saputo won control of WCB in late 2013 and is one of the 10 biggest dairy processing companies in the world with a $9.2 billion business.
WCB posted annual sales of $609 million for the 12 months to June 30, 2014, up 22.7% on the previous year.
At WCB’s recent AGM, CEO David Lord said that it was an outstanding year for the company with strong international dairy demand supporting improved commodity pricing, which was further complemented by a depreciating Australian dollar.