Watchdog will ‘regret’ letting Coles buy milk processing plants, dairy industry representatives say
The ACCC approved the supermarket’s takeover of Saputo’s two dairy processing facilities after a ‘detailed review’ but farmers fear the move will reduce competition in the market.
Dairy industry representatives have said the Australian consumer watchdog will regret its decision to allow Coles to purchase two fresh milk processing facilities, making it the only supermarket in Australia to own and operate a milk processor.
The Australian Competition and Consumer Commission said it approved the takeover by Coles after months of “careful consideration” and “discussions” with farmers and industry bodies, and a “detailed review” of Saputo and Coles’ internal documents.
In April, Coles announced it had bought the Erskine Park factory in New South Wales and the Laverton plant in Victoria from dairy processor Saputo for $105m, subject to regulatory approval from the ACCC.
The president of advocacy body Australian Dairy Farmers (ADF), Rick Gladigau, said he opposed the decision.
“We hope that in 10 years’ time we are not saying ‘we told you so’, like we have said about the impact of $1 litre milk that Coles started in 2011,” Gladigau said.
“We cannot see how this deal will result in anything but increasing Coles’ already substantial market power, reducing market competition and market transparency, and increasing risk to farmers.
“[It] will be a key turning point that the industry and ACCC will look back upon and regret.”
Before the takeover, Coles already acquired about 80% of milk processed at the facilities, buying raw milk from producers and processing it at the plants under an agreement with Saputo.
Farmers raised concerns that the acquisition would result in Saputo leaving the NSW fresh milk market entirely, reducing competition of raw milk buyers.
But the ACCC deputy chair, Mick Keogh, said Saputo’s financial records suggest the company has the “commercial incentive” to continue operations in NSW, and therefore takeover is “unlikely” to significantly lessen competition in the market.
Aston Brown, The Guardian, 4 December 2023.
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Saputo seeks buyer for King Island Dairy
Saputo is seeking a buyer for its King Island Dairy operations, revealing it is seeking to offload its interests on the Bass Strait isle.
Management announced a “strategic review of its King Island Dairy facility in Tasmania” this morning as well as confirming an additional $27 million towards improvement projects across its sites in Victoria and Tasmania.
The review will consider a range of commercial alternatives, including a potential sale to a third party, with its 63 staff informed of the financial deliberations.
Saputo chief operating officer Leanne Cutts said the processor hoped to find a buyer for King Island Dairy soon.
“In making these investments and strategic decisions, we remain focused on maximising our return for every litre of milk,” she said.
“(This will) further enhance SDA’s position as a high-quality, low-cost processor in Australia.”
Saputo is also in the process of selling its Laverton and Erskine Park processing sites, subject to regulatory approval.
“As King Island Dairy’s historic roots are deeply embedded in the region, we hope to find a buyer for the facility to ensure the continued success of its renowned specialty cheese products,” Ms Cutts said.
“We recognise the potential impact any decision may have on the King Island community, especially our employees and dairy farmers, and we are committed to thoughtfully considering all possible scenarios before any decisions are made.”
Alex Sinnott, The Weekly Times, 8 November 2023.
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Agriculture Minister Murray Watt calls for clarity over Saputo’s Australian future
Saputo need to be clear about which Australian factories it intends to shut, Federal Agriculture Minister Murray Watt says.
In a speech to Canadian investors last month, company boss Lino Saputo Jnr announced the processor intended to downsize from 11 to five factories in Australia, but did not stipulate which sites were earmarked for closure.
A spokeswoman for Saputo this week said: “At this time, beyond the previously announced SDA network optimisation activities, no decisions have been made regarding its manufacturing footprint.”
The announcement follows moves by Saputo to sell its Melbourne and Sydney processing sites to Coles supermarket.
The Australian Competition and Consumer Commission is examining the deal and recently push back a decision on whether to green light the transaction.
Alex Sinnott, The Weekly Times, October 12, 2023.
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Australian Dairy Farmers urge ACCC to block Coles/Saputo deal
In Short: The nation’s dairy farmer lobby says the ACCC needs to block Coles from buying two Saputo processing plants.
Australia’s competition watchdog needs to bite back at plans by Coles to acquire Saputo’s milk processing plants, the nation’s dairy farmer leader says.
Australian Dairy Farmers president Rick Gladigau has made an eleventh-hour plea to the Australian Competition and Consumer Commission to oppose the $105 million deal, with a decision set to be handed down next week.
He says the proposed supermarket takeover of the Sydney and Melbourne bottling plants will reduce competition in the dairy supply chain.
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Source: Alex Sinnott, The Weekly Times, 6 Sept 2023.
Saputo sells facilities to Coles
"Saputo has announced it plans to sell two of its fresh milk processing facilities in Laverton North, Victoria, and Erskine Park, NSW, to supermarket Coles, a situation the dairy industry says needs to be watched closely...
Dairy advocacy group eastAUSmilk said the farm gate price paid to dairy farmers must remain fair and transparent, with Coles now owning the equivalent of the dairy “paddock to plate“.
eastAUSmilk co-chief executive officer Shaughn Morgan said the ACCC must ensure there were no negative impacts upon the Australian dairy industry, especially given the declining milk production and farmers exiting the industry over the past years.
"We will closely monitor the ACCC review and the impact that the Coles purchase may have on the dairy industry," he said.
The sale follows Saputo’s announcement late last year that it was selling its Maffra plant."
To read the article in full, go to: The Cowra Free Press
Source: Fiona Lloyd, 4 April 2023
Milk price comparison: Fonterra beats Bega and Saputo
Fonterra leads on farmgate price ahead of rivals Saputo and Bega, but all dairy processors are struggling. See the latest milk price comparison.
New Zealand dairy giant Fonterra has beat its major rivals to top the milk price pool, despite embattled Canadian processor Saputo’s recent 10-cent step up.
Milk2Market’s latest milk price comparison has Fonterra offering $9.52 a kilogram of milk solids for farmers delivering two million litres, followed by Bega Cheese on $9.45/kgMS, with Saputo on $9.40/kgMS.
Competition among processors for farmers’ milk was already strong heading into this season, but La Nina-driven floods and heavy rain swamped pastures and drove national milk production down 6.5 per cent to the end of October.
If the trend continues Australian dairy farmers will produce just 7.99 billion litres this season, compared to 8.55 billion in 2021-22 and 9.8 billion seven years ago.
Processors have not been able to run their processing plants at anywhere near capacity and have also been hard hit by the global energy crisis.
Diesel price hikes have driven up transport costs, while gas, used in evaporators to make milk powders, has soared to record levels.
While Saputo, Bega Cheese and Fonterra negotiate their own contract gas prices with suppliers, recently gazetted standard contract rates show AGL has lifted its weighted average small business tariffs by 22 per cent, Energy Australia by 35.9 per cent and Alinta Energy by a whopping 67.9 per cent.
Saputo has already rationalised its transport fleet and announced the closure of its Maffra plant and its bulk powders production at Leongatha, both of which use huge amounts of gas in their evaporators.
Saputo closes dairy factory in Maffra, scales down others in Victoria and South Australia, with 75 jobs lost
Saputo is to close its dairy factory in Maffra and scale back operations at two more sites, affecting 75 employees.
Bulk powder production at its Leongatha site and cheese packaging at Mil-Lel, near Mount Gambier, will be shut down.
In February, the Canadian milk processor announced plans to cut 18 jobs at its Maffra and Cobram factories.
And, in August, it announced further plans to scale back its Australian operations in the face of declining milk supply.
Speaking to the ABC this morning, the company said 75 employees would be affected, and redeployment would be discussed and, where not available, severance would be provided.
Leanne Cutts, president and chief operating officer, said some functions of the three sites would be relocated.
"Many of those impacted production and packaging functions at those three facilities will be integrated into facilities across the network," she said.
"It's business as usual for our customers … no change to the products and brands."
Ms Cutts said suppliers' milk would continue to be collected and processed across the Saputo network.
"We're committed to the Australian dairy industry and we want every litre of milk," she said.
When asked whether Saputo might close more plants, Ms Cutts said "we're always reviewing our network … because we want to make sure we continue to be efficient".
The changes will take effect in the first three months of 2023.
Tim Bull, Member for Gippsland East, said the Maffra closure was not a surprise, but it was still a big blow for the town of 4,000 people.
"The Maffra community saw the writing on the wall when there was a significant downsizing in the past 12 months, but it's always disappointing when you're losing jobs out of a rural town," he said.
"It comes at a time when there are plenty of sectors looking for workers, so there are plenty of job opportunities around, but we need to make sure these workers are transitioned appropriately."
Mr Bull said he hoped Saputo would support the repurposing of the Maffra factory.
"It is a big site in the heart of Maffra, so hopefully we can get Saputo together with Wellington Shire Council and come up with a plan to use that site for the betterment of the community," he said.
Saputo significantly expanded its presence in the Australian market when it purchased the former farmer-owned dairy cooperative Murray Goulburn in 2018.
At its peak in 2014–15, Murray Goulburn collected more than 3.6 billion litres of milk from Australian dairy farmers.
Since then, Saputo's milk intake has fallen to less than 2 billion litres.