The head of Canadian dairy giant Saputo has defended the company’s opening milk price – described by one dairy farmer as ‘dismal’.
Saputo chief executive Lino Saputo junior, in Australia for supplier meetings, said the $5.75 kilogram/Milk Solids opening price was responsible.
“We think $5.75 is a very good indication of where the current international markets are at, right now,” Mr Saputo said.
““At the end of the year, we are going to be paying leading prices for dairy.”
The company acquired Murray Goulburn in April.
Read more: MG sale to Saputo approved by overwhelming majority
Read more: Farmers query Saputo’s opening price
He said this year’s opening price was higher than last year’s, yet dairy markets were trending lower.
“I think it is a pretty aggressive opening price,” Mr Saputo said.
I’ll be away but I have 2 questions;— Charles Wallis (@harrimar1) July 12, 2018
1. For what reason such a dismal opening price comparatively, when so much stainless to fill ?
2.what do processors have to fear from a mandatory code ?
“It’s a reflection of where we see the markets today, but I do remind the suppliers to focus more on the closing price than the opening price.”
I think it is a pretty aggressive opening price.
He said Saputo watched the Global Dairy Trade, which fell five per cent last week, very closely.
“The GDT is extremely important, in the function of what we can pay for solids,” Mr Saputo said.
“I guess you are confirming our opening price was actually a good opening price.
“It would be ill-advised, and perhaps not prudent, to give the wrong indication of where the markets are at.
Read more: Trade tensions unlikely to have caused GDT drop
Mr Saputo said the supplier meetings, throughout Victoria and Tasmania, were intended to give an indication as to the decisions behind the opening price.
“I reminded suppliers this is the second highest opening price in 10 years, so it’s not such a bad place to start.”
He said step-ups would be reviewed on a quarterly basis.
“We will take a look at the international markets, on a quarterly basis, and as those markets get better around the world, then we will definitely take a step up if there is justification to do so.
Lino is talking long term where most are talking about now and bugger all else. I’m dairying for the long term and I want to work with a processor who has the same mindset.— Peter Young🇦🇺 (@PeterYo96696792) July 11, 2018
“But we will review that quarterly, we will not do that weekly, or monthly.”
He said step-ups would be based on publicly based information as well as indications from economists.
Mr Saputo denied rumours that Murray Goulburn had lost milk since Saputo took control.
“In fact, we are ahead of where we were last year by about 30-40million litres,” he said.
Some suppliers had come back to MG, as it aimed to lift supply to 2.2 million litres, in the next two to three years.
“This is not a sprint, it’s a marathon,” Mr Saputo said.
‘We believe in doing the right thing, every day, and it might take us some time to convince other suppliers to come back,” he said.
“But I think if we are consistent with our message, if we are transparent in our approach and we treat our suppliers with respect and loyalty, ultimately they will find we are the best home for their milk.”