Lino says one year to get Aus right

Lino says one year to get Aus right

Dairy
THIRSTY: Lino Saputo Jr says Saputo Australia needs a lot more milk to reach its target of 90 per cent utilisation and hopes most of it will come from farmers.

THIRSTY: Lino Saputo Jr says Saputo Australia needs a lot more milk to reach its target of 90 per cent utilisation and hopes most of it will come from farmers.

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Lino Saputo Jr. says he needs another 500 million litres of milk in the next financial year to make Saputo's Australian operations perform.

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Lino Saputo Jr. says he needs another 500 million litres of milk in the next financial year to make Saputo's Australian operations perform.

"The benchmark for performance is, number one, getting those assets to process at an efficiency level that is equivalent to what we have in other platforms and I'm saying about 90 per cent capacity utilisation," Mr Saputo said.

"I think if we have the right investment in the right stainless in the right plant and we can fill those plants to 90pc ultilisation, by and large, they will be performing."

"We have a three-year timeframe from the time we acquire, so we are in year two, so we've got this fiscal year as well as next fiscal year to get to our point of efficiency ratios."

Asked what would happen if Saputo Australia failed to achieve that target, Mr Saputo was non-committal.

"Of course, we'd have to look at the entire platform and see how we can get there - we're still a long ways away from that," he said.

Mr Saputo said none of the Australian plants were earmarked for review "at this stage".

"I think that review was done by Murray Goulburn before we acquired them," he said.

"They did close down two plants before we did acquire.

"I think their assessment was right, I think they did the right job.

"Look, I think we've got the right assets in the right place and it's up to us know to convince suppliers to sell us more milk so we can fill those assets and make them very, very efficient."

Mr Saputo said that not all the milk needed to come directly from farmers.

"We have three sources of milk," he said.

"Our patrons, farmer suppliers, are the first.

"We will do co-packing and then there's third party milk from our competitors when they have excess milk.

"But I do believe - I certainly hope that - the majority of our milk will come directly from farmers."

He said the company continued to make changes to refine its offering to farmers.

"Is the handbook perfect? No, it's not," Mr Saputo said, "but it's not a sprint, it's a marathon."

"We know that when we make changes, they will suit some farmers more than others.

"We continue to listen to feedback."

In reference to a question about Saputo's productivity payments, Mr Saputo said the processor was not concentrating on the largest farmers.

"We have a duty to be fair and appreciate the value and strength of family farms," he said.

"There are absolutely no special deals."

Mr Saputo said his company's share of the Australian raw milk market sat at 23pc, giving it a greater footprint here than in its home base of Canada.

He reiterated the importance of loyalty between farmers and Saputo.

"There could be farmers that will choose to supply someone else and then want to come back," he said.

"We'll take them back to the degree that that milk sits within our programs.

"The ones that have been loyal to us - and I've said this from day one since we've been in Australia - those suppliers that have been loyal to us, it is our responsibility to make sure that we take 100pc of their milk 100pc of the time."

Dairy Australia's most recent Situation & Outlook Report showed farmers were switching processors in unprecedented numbers and Mr Saputo said his company was not immune.

READ MORE: Processor churn: before you make the move

"I would say that probably 70 pc of our milk base is loyal has been there through thick and thin and 30pc is transient," he said.

The story Lino says one year to get Aus right first appeared on Stock & Land.

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