Addressing the Australian Dairy Conference in Canberra last week, Saputo’s president, Lino Saputo, said if processors built new, high technology milk plants, they should shut down some of the older ones.
“We need to take a good hard look at what types of products we are manufacturing, how much product we are supplying the world markets and whether there is a requirement for that,” Mr Saputo said.
“The simple answer is that there is too much infrastructure in the system.
“Some of the infrastructure needs to be retired.
“Other infrastructure needs to be remodelled to be more effective and more efficient, which I am sure a lot of companies are doing.”
Mr Saputo’s comments back the decision of Murray Goulburn in recent years to shut some factories.
Its Rochester plant was shut down in January last year and the company had intended to mothball the Kiewa factory last year as well until it was given a reprieve by Saputo.
Fonterra Australia managing director Rene Dedoncker agreed older plants should be permanently shut but it depended on long-term business plans.
“It depends on what game you are playing,” Mr Dedoncker said.
“We play the long game.
“We built Stanhope, which burnt down five years ago, and we now have a facility that is producing five times as much cheese.
“We’d like it to do more, but the reality is that we are struggling (to source milk).”
Mr Dedoncker said Fonterra did not regret the investment.
“It is state of the art and we take a 10-year view,” he said.