Saputo urges end to dairy pricing system

WINNIPEG (Reuters) — Saputo Inc., one of Canada’s largest dairies, supports ending a domestic milk ingredient pricing system that has angered the United States, chief executive officer Lino Saputo Jr. said last week, showing a rare crack in solidarity among processors and the country’s sheltered dairy farmers.

The Class 7 pricing agreement, struck in 2016 between Canadian dairy processors including Saputo and farmers, allowed processors to pay lower prices for domestic milk ingredients used to make cheese and yogurt and to export the rest.

“They want their cake and they want to eat it, too,” Saputo Jr. said, referring to farmers.

“Which doesn’t make sense. You can’t hold onto your milk supply-managed system and have a class of milk competing with world markets at the same time.”

Saputo Jr.’s remarks came after U.S. Agriculture Secretary Sonny Perdue said he did not see how the countries could go forward in trade talks without an end to Class 7.

Dairy Farmers of Canada said the industry still speaks with one voice.

“Although (Saputo’s) comments took us by surprise, perhaps they are the product of confusion around the notion of flexibility suggested by the federal government,” said DFC CEO Jacques Lefebvre, referring to Prime Minister Justin Trudeau’s comments to a U.S. television network this month about talks on dairy.

Dairy Processors Association of Canada, of which Saputo is a member, said Class 7 was an effort to modernize the system and that its support has not changed.

“We view efforts to expand the dairy sector’s contributions to the Canadian economy as positive,” DPAC CEO Mathieu Frigon said.

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