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End of $1 supermarket milk

Milk prices will rise if Saputo’s acquisition of Murray Goulburn is approved.

Following an announcement last month that Canadian milk brand Saputo would purchase Murray Goulburn, CEO Lino Saputo said he doesn’t “know the economics” of the supermarket deals.

“Through this process, we will inherit all of the contracts that were signed by MG,” Mr Saputo told the ABC.

“I don’t know the economics of it, to be quite frank with you, because we weren’t privy to those contracts for antitrust reasons.

“But we will honour the contracts. When those contracts expire we have to look at the economics of them and then from there we’ll see what we need to do moving forward. I don’t know the economics of dollar milk.

“We’ll have to take a look at that once we get involved in the business. The one thing I can say, though, is that when you look at other food products that are on the shelves, when you can get water at $3-a-litre and perhaps soda at $5-a-litre, for all the energy and effort that farmers are putting into producing milk, I’m not sure that it is the right value.”

Mr Saputo said he knew the company would be dairy leaders and that they had a duty to be responsible in that way.

“That is a long-term guarantee. Part of our advantage is we’re able to produce high-quality products at low cost, and as we do that we gain value from being able to sell high-quality solids to customers around the world and domestically.

“We don’t give our product away. Our profitability is much higher than the average in the dairy industry, and that affords us the ability to pay leading prices for dairy.”

Saputo is still waiting on approval from the ACCC (Australian Competition and Consumer Commission) for the acquisition of Murray Goulburn before it can move forward.

 

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