The Canadian businessman leading the push to buy the Australian processor Murray Goulburn, Lino Saputo jnr, has questioned the sale of fresh milk for $1 a litre, telling a dairy conference, “I just don’t see how $1 milk could be viable.”
He also told hundreds of people in the dairy industry his reaction to seeing milk selling at $1 a litre.
“As a consumer, when I walk into the retail outlet and I see that water is sold at $3 a litre, and milk is sold at $1 a litre, I think there is an imbalance there,” he said.
Mr Saputo made the comments on $1-per-litre milk in response to a question about what Saputo’s attitude would be on current Murray Goulburn liquid milk contracts.
Murray Goulburn, the dairy co-operative that Saputo wants to buy, has a contract to supply milk to Coles that the supermarket giant sells for $1 a litre.
Ever since $1-per-litre milk was introduced by the supermarket chains a few years ago, the product has been very popular with consumers, but has angered dairy farmers.
"There is heritage and lineage here. So you’re talking about farms, succession farms into the third, fourth, fifth, sixth, seventh generation ... They know their industry extremely well.''
Mr Saputo said Saputo was “not privy” to MG’s contracts, and added that he wouldn’t like to say that he was for or against $1 per litre milk, “because I don’t know the economics of it”.
He also stressed that if Saputo became the new owner of Murray Goulburn, it would honour all contracts it had signed.
A spokesman for Coles declined to respond to Mr Saputo's comments.
In a wide-ranging address to the Australian Dairy Conference,Mr Saputo discussed the early history of the Saputo dairy company set up by his family in Canada in 1954, its global growth, and the attractiveness of the Australian dairy industry.
Mr Saputo, who is the company's chief executive and chairman, said his company heard repeatedly of Australia's high-quality dairy produce.
“Australia has a reputation for high-quality [dairy] solids,” he said.
“Australia is a key dairy-producing country, high quality at a competitive price. So the infrastructure was here ... And Australia also had the capability to supply the international markets, because there was excess production.
“So it was inevitable for us, ultimately, to consider Australia as an important platform for Saputo, in our ambitions to be a global dairy player.”
In 2017 Murray Goulburn revealed it had agreed to sell its operations to Saputo, in a $1.31 billion deal. The proposed deal is subject to regulatory approval from the Australian Competition and Consumer Commission and the Foreign Investment Review Board.
To go ahead the deal would also need the backing of 50 per cent plus one of the farmers who supply MG with milk.
In an interview with Fairfax Media after the conference, when asked whether he believed farmers would back the deal, Mr Saputo said: “I think so, based on the feedback that we got when we did the supplier meetings back in November. I think the support for Saputo buying the MG assets there was very, very strong.”
He also said: "We’re not here to destroy markets. We like to build markets, we like to build good strong infrastructure for all stakeholders in the dairy space.”
Mr Saputo said his company was very excited about the proposed deal.
“We’re hoping it happens sooner rather than later, because there are a lot of people involved in MG that really have an uncertain future right now. We’d like this deal to close as quickly as possible, so that we can give them some certainty for the future,” he said.