Saputo Australia makes significant admission on its milk-supply status

The company last month revealed in its annual report it was now "a leading dairy processor in Australia".

This was in contrast to its 2022 annual report and the company profile on its Australian website as recently as May 25, when it said: "We are the largest dairy processor in Australia".

That website profile has also since changed to now say: "We are a leading dairy processor in Australia."

The company became Australia's biggest dairy processor in 2018 when it acquired the beleaguered Murray Goulburn Co-Operative for $1.3 billion following MG's spectacular collapse after the 2016 price clawback.

Saputo had already entered the Australian market with the acquisition of Warrnambool Cheese and Butter in 2013.

In 2017, when Saputo announced it had bought the co-operative, Murray Goulburn, was processing about 2.7 billion litres of milk, and Warrnambool Cheese and Butter was processing about 1 billion litres.

This made Saputo the largest dairy processor in the nation.

Industry sources say Saputo's combined 3.7 billion litres has since fallen to about 2 billion litres, which could drop further with Saputo's proposed sale of two milk processing plants to Coles.

Dairy Australia said the 2023-24 national production would be 8-8.2 billion litres.

Saputo would not be drawn on what prompted the wording change.

In a statement today, Saputo International and Europe president and chief operating officer Leanne Cutts said: "With a declining national milk pool, SDA is proactively adapting its manufacturing footprint to strengthen our market competitiveness. This has included some responsible but difficult decisions to streamline our operations to be more efficient, while reinvesting in processing capabilities that maximise our return on every litre of milk."

Ms Cutts said Saputo "opened with a strong price for the new milk season, securing a sustainable uplift in our milk volume to ensure high utilisation and efficiency of our plants".

In response to a question on Saputo's long-term commitment to Australia, Ms Cutts said "farmers and the industry are confident about the future. We share this confidence and are here to stay."

The change in processing status has come amid industry speculation about Saputo's plans after it closed its Maffra factory in Gippsland, and shut down milk powder production at Leongatha and cheese packaging at Mil-Lel in South Australia.

It has, however, announced a $20-million investment in its Smithton plant in Tasmania.

United Dairyfarmers of Victoria president Mark Billing said he didn't necessarily read anything "sinister" into the change in Saputo's profile.

"Saputo has rationalised their footprint over the past 18 months, which I understand might have reduced capacity, but as I understand it that might be common for all of the bigger processors in Australia too," Mr Billing said.

"By saying they are the biggest flexes their muscle in the processing sector, so with that change in tack might indicate that somebody else is bigger.

"From a dairy farmer perspective we still need to have competition.

"If any particular processor or processors are really starting to struggle, we need to be mindful of that."

The Australian Dairy Products Federation executive director Janine Waller was unaware of Saputo's change in processor status, and believed it may have been in response to Bega's 2021 purchase of Lion Nathan's dairy and drinks division.

Ms Waller believed Saputo and Bega would now have similar production size, with Fonterra in the mix as well.

Want to read more stories like this?

Sign up below (select Dairy News) to receive our e-newsletter delivered fresh to your email in-box twice a week.