Canadian Manufacturing

Saputo says it is ready to handle TPP supply management changes

The company will be able to adapt because it has large operations on both sides of the Canada-U.S. border

LAVAL, Que.—The head of the country’s largest dairy processor says Saputo Inc. is well-positioned to prosper no matter what changes may come to Canada’s dairy supply management system as a result of the proposed Trans-Pacific Partnership.

Chief executive Lino Saputo Jr. said the company will be able to adapt to the free trade deal because it has large operations on both sides of the Canada-U.S. border and in other countries.

“If the system should change or dissolve there is going to be turmoil for everyone _ for dairy farmers and for processors like ourselves,” he said Tuesday after the company’s annual meeting.

“But I have great confidence that we will find a way to adapt. We always have and we always will.”

Saputo said some dairy farmers have good reason to be worried if there are dramatic changes to Canada’s protective supply management system, as demanded by some of the 12 countries involved in negotiating the trade deal. But he said other farmers are efficient, can compete with anybody in the world and flourish in an unregulated system.

The abolition of Canada’s dairy supply management system would threaten 4,500 to 6,000 farms and up to 24,000 direct jobs across the country, according to a study released last week commissioned by dairy co-operative and Saputo rival Agropur.

Up to 40 per cent of Canada’s milk production would be at risk, said the 56-page report from Boston Consulting Group.

Quebec farmers who operate half of Canada’s dairy farms would be among the hardest hit, it said.

Saputo said the Quebec-based cheese and dairy processor (TSX:SAP) has thrived under the current system and hasn’t lobbied for any particular change. But he added a deal could reduce milk prices for Canadian consumers and open north-south trade, which would allow the company to take advantage of its large distribution, warehousing and logistics network in both the United States and Canada.

Efforts to seal a deal broke down last week. But Prime Minister Stephen Harper said Monday that Canada will remain at the negotiating table while the federal election campaign is underway.

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