Key points:
Saputo will spend $20 million on a new facility at Smithton in north-west Tasmania
The factory will manufacture cream cheese, previously done at its mothballed Maffra site
Saputo’s boss says Australia’s processing capacity is still in surplus, as the milk supply continues to slide
Saputo has announced a $20 million investment at its Smithton plant in north-west Tasmania.
That money will be spent on infrastructure for cream cheese processing, which was previously done at its mothballed Maffra facility that closed last week.
The Australian milk processing sector is considered to be substantially over capacity relative to milk supply, which could drop below 8 billion litres for the first time in three decades.
Chief executive of the Canadian company, Lino A Saputo, made the announcement to ABC Rural today while on a tour of his Australian facilities.
“Smithton is receiving some capital dollars, we’re moving some production … from our Maffra plant over to Smithton, it’s a $20 million investment that’s going to allow us to produce and develop some high-value products,” he said.
“That will mean more jobs for the plant — permanent, contracted and casual jobs.”
New jobs at Smithton but jobs lost at Maffra
Close to 80 jobs are being lost because of the closure of Maffra, along with the shut-down of a milk powder line at Leongatha and cheese packing operations at Mil-Lel in South Australia.
Mr Saputo said the biggest challenge for Australia’s milk processing sector was a long-term decline in milk supply.
“The dairy pool has been declining over the course of the past three years,” he said.
“In fact, it’s been declining since my first trip out here in 2001. Then the country was producing about 11 billion litres of milk.
“When we acquired Warrnambool Cheese and Butter I believe that number was about 9.5 billion and now we’re around 8.5 billion.
“So the milk pool is shrinking and it’s important for us to right-size our network and unfortunately the Maffra closure is one of the casualties.”
Committed to Australia
Despite the challenges, Mr Saputo said the company had a long-term commitment in Australia and had no regrets over its purchase of farmer-owned cooperative Murray Goulburn in 2018.
“We’re 100 per cent committed to Australia, and not just in the short term. We’re committed for the long term,” he said.
“Murray Goulburn had better days in the past, but the brands we inherited, the talent, and dairy processing expertise [were invaluable].
“We have incredible products and incredible people manufacturing them, so for us to abandon this market would be foolish.”
More closures to come
Mr Saputo said declining milk supply meant there was significant surplus milk processing capacity, and that would mean further factory closures.
“I think the Australian dairy industry has to get smarter about the way they’re processing their solids,” he said.
“There is way too much stainless steel in this industry for the amount of milk being produced.
“So yes, there will be some plant closures, but there will be heavy investments as well in other facilities to focus on higher valued categories of dairy products that we can sell domestically and around the world.”
