Dairy merger sees plants specialize

SASKATOON – Dairy Producers Co-operative Ltd. has been officially absorbed into an Alberta-British Columbia dairy conglomerate, forming a 2,100 member western Canadian milk giant.

Dairy Producers explained the death of Saskatchewan dairy independence by heralding the expansion of Agrifoods International Co-operative Ltd. as “the most important announcement in our 99 years of history.”

Saskatchewan and Vancouver-based officials also said the 550-member farmer co-operative didn’t have much choice if it wanted to survive.

“Mid-sized dairies have all but disappeared,” said Agrifoods chief executive officer David Coe.

“It’s not easy (to survive) today in a market characterized by the growth and proliferation of new and traditional food companies, vertically integrated processing, increasing customer concentration and the growth of non-union cottage dairies.”

Leo Bertoia, chair of the now-defunct Dairy Producers, said “I suppose we had a choice, but we also had to face reality.”

Saskatchewan milk producers will integrate their facilities and milk production with those to the west. Coe said the company has no plans to close any Saskatchewan processing plants and all Sask-atchewan milk will continue to be processed in the province.

Plants will specialize

What will change is how plants are used, Coe said. Agrifoods wants to dedicate plants to specialize and produce only one or two products.

By creating efficient, low-cost processing plants, the multi-provincial dairy co-operative can survive in a market “increasingly dominated by multinational corporations, such as Unilever and Nestle,” said Agrifoods president John Killoran.

Coe said Agrifoods, commonly known as Dairyworld, is now the largest dairy co-operative in Canada and the largest food company west of Ontario.

Dairy Producers was finding it hard to give major food companies what they demanded, Bertoia said, because they often want to buy uniform products from coast to coast, not province by province.

Agrifoods formed in 1992 when one B.C. and two Alberta dairy co-operatives amalgamated. Saskatch-ewan Dairy producers flirted with joining, but held back until this year.

Three Saskatchewan representatives will join the Agrifoods board of directors, which now has four Alberta and three B.C. members.

Dairy Producers officially joined Agrifoods Jan. 7. “Dairy Producers” will live on as a brand name.

Now that Saskatchewan producers are inside Agrifoods, they won’t likely leave, Coe said.

“How do you unmix the omelette? It would be a very difficult thing to do.”

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