THE opening milk price for Saputo, the global company that took over Murray Goulburn, may not have been as high as first hoped, but suppliers are backing CEO Lino Saputo Jr to deliver the goods.
Mr Saputo Jr was in Leongatha last week for a meeting with suppliers, where he told them not to judge him for the $5.75/kg milk solids, but what will follow in the months to come.
“We chose this opening price based on our assessment of the expectations of the market conditions for the rest of the year,” Mr Saputo said after the meeting.
“We believe it is responsible and allows room for upward movements if improved market conditions are realised throughout the year.”
He said the conservative early approach followed by strong step-ups has been well received elsewhere. Suppliers of Warrnambool Cheese and Butter have been most content following Saputo’s takeover there.
“It’s not something new that we do and suppliers appreciate the transparency.”
Mr Saputo said the future of dairy looks good all around the world with growing markets to drive demand.
He agreed farmers weren’t paid enough for their milk, and it was up to industry leaders to find the right balance between supply and demand to solve the issues.
Mr Saputo said the company was committed to all former Murray Goulburn factories, except for Koroit which had to be carved out prior to the takeover.
“They all have a great future and can expect some capital investment, and that includes Leongatha.”
He said he hoped to bring suppliers “back home” after the MG price crash in 2016, and attract new farmers to return the factory to full capacity.
“Once they understand our work ethic and character, I’m sure we’ll have the supply we need.”
Saputo’s net milk supply has increased since May 1 and the company is receiving interest from prospective suppliers across its operations.
Gordon Vagg from Leongatha South stuck fat with MG throughout the crisis, and while his loyalty was tested to the extreme, he’s glad he stayed.
“The professionalism in the delivery of the presentation (at the supplier meeting) was just another step up from what we’ve seen before.
“We were provided with details about what processors around the world are doing and all the global trends, not just Saputo’s own data. That’s not something we’re used to.
“We were able to speak with Lino personally and ask questions. I’d never spoken to any of the previous MG CEOs.
“He runs the meetings himself; he doesn’t need a chairperson. He’s just very approachable and down to earth.
“He looks for loyalty in suppliers and customers and his handshake is as good as a binding contract. That’s the way his family has done business and why it’s so successful, with 43 per cent of the US milk market.”
Mr Vagg said he knows of many former MG suppliers who are keen to come back when their contracts run out.
“The only thing the previous board of MG did right was to find the right buyer,” Mr Vagg said.
“I always thought that Murray Goulburn should have aligned itself with an overseas company to provide better access to international markets.
“MG was just too small on a global scale. I’m so thankful we’ve got a decent look at it now.”