Chief executive of Canadian dairy giant Saputo, Lino Saputo Jr, visits suppliers in the south east of South Australia, calling for an increase in production.
Australian dairy farmers are again being asked to increase their production, with one processor hoping to see 10 per cent more milk every year.
Lino Saputo Jr is the chief executive of Canadian dairy giant, Saputo, which this year took control of 88 per cent of Warrnambool Cheese and Butter.
He met with suppliers in South Australia and Victoria, to search for answers to one very loaded question:
“How can we come up with programs that would encourage the current dairy farmer to invest in the business and the next generation to think about dairy farming as an industry and as a business for their future?”
Mr Saputo says Warrnambool Cheese and Butter (WCB) would readily invest in infrastructure should suppliers provide more product, but acknowledges cash-flow problems stem back to the farm gate.
“I understand dairy farmers have had a tough run over the course of the last 10 years,” he says.
“I think there were a lot of promises made with respect to the growing international demands, specifically coming from China, which hasn’t really materialised.
“I believe that demand will come, I believe the next 10 years will be much more prosperous than the past 10 years.”
Part of WCB’s push is an incentive scheme that would provide incremental payment increases for milk produced beyond what a farmer is already supplying.
“It’s not an upfront payment, it’s an allocation for incremental volumes of milk where we can take a percentage and show them we’re prepared to invest for the future,” he says.
“It’s been blind faith for 40 years now … I’m to the point now where I’m actually thinking, is it worth the effort?”
South Australian dairy farmer
Mr Saputo Jr rejects suggestions the next 12 months will feature step downs in milk price.
“I think there will be an opportunity for step ups and not step downs,” he says.
A WCB supplier in south east South Australia, who asked not to be named, does not share the processor’s optimism.
“I’m to the point now where I’m actually thinking, is it worth the effort?” he says.
“We don’t know whether next year’s opening price is going to be less than we’re getting this year.
“But I do know one thing I’ll guarantee you; the price of electricity, fuel, fertiliser, tyres, equipment, will all be more.”
The farmer says he does have the capacity to invest in his enterprise and increase production but doesn’t see the incentive to do so.
“It’s been blind faith for 40 years now and I still keep thinking, yes eventually they’re going to run out of milk and they’ll have to start paying us for it.
“But it doesn’t seem to have ever happened.”
He was also critical of the incentive scheme proposed by Mr Saputo.
“Why should the person on this side of the road, because he’s got the capacity to be able to increase his milk production, be paid more than the bloke on the other side of the road who hasn’t” he says.
“Why does suddenly one lot of milk become worth more than the other when it’s going into the same factory?
“Sorry, that doesn’t hold a lot of water with me.”
