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Jun 19, 2018

'There is no free trade': Saputo's plan to protect supply management

Saputo CEO calls for freer-flowing borders for Canada's milk products


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The CEO of Canada’s largest dairy processor sees no reason for Canada to have to give up supply management.

“There is no free trade in the milk supply-managed system. There is none,” Saputo CEO Lino Saputo Jr. told BNN Bloomberg in an interview on Tuesday. “And Canada is happy to work within their domestic market and their domestic consumption. That’s not a problem. And, for a company like Saputo if we want to grow, we’ll grow in other jurisdictions, other platforms where we have access to that milk to feed the world [and] emerging markets.”

However, Saputo does have a solution for Donald Trump’s dairy rage.

Saputo thinks the scaling back of the Class 7 policy would give Canada something to offer the U.S. in NAFTA without sacrificing supply management.  Class 7 – which was instituted last year – granted Canadian processors cheaper access to domestic ultra-filtered milk, a key factor in cheese and yogurt production.

Saputo CEO sees cyclical downturn in dairy, not worried about supply glut

Lino Saputo Jr., chairman and CEO of Saputo, joins BNN Bloomberg's Amanda Lang and Bloomberg's Sherry Ahn for a look at the shifting trade winds for North America's dairy market.

“The milk supply management system in Canada has been in existence since the 1970s. There’s no issue with the quota system in Canada,” he said. “What has been in existence for only two years is the Class 7.”

“I think, as an industry, we need to start talking about: What is our Plan B, should we get to a negotiation? I don’t think incremental access to Canada is the right solution,” Saputo added.

Saputo added that his company is well-hedged against Trump’s multi-front trade assault, sticking to domestic production on both sides of the Canada-U.S. dispute and handling much of its international business from outside North America.

“We’re exporting less than five per cent of our total manufacturing from the U.S. Our domestic business is one that services domestic consumers. The servicing of the Pacific Rim would come out of our Argentinian and our Australian platforms,” Saputo said.

“So any spat between these countries really has very little effect on Saputo.”