MONTREAL - Canada's largest dairy processors are pressing the federal government to allocate to them the lion's share of higher cheese import quotas from Europe under the new free trade deal with the European Union, Saputo chief executive Lino Saputo Jr. said Monday.
Those with a vested interest in the dairy industry, rather than just any business startup, should receive the largest allocations of the additional 17 million kilograms of product from Europe that will be allowed into Canada each year under the deal, Saputo said following a speech to the Canadian Club of Montreal.
"We're saying that perhaps the incumbents, those that are part of the dairy industry, those that have import licences already, those that have a vested interest in the industry, should inherit those new licences," he told reporters.
An association representing Canada's dominant dairy processors — Saputo, Agropur and Parmalat — has been pressing its case with Canadian officials. But Saputo says there is little understanding of how the new quotas will be distributed.
Saputo backed rival Agropur's call for federal action to prevent the domestic market from falling victim to potentially cheaper imports from Europe.
The Canadian producers fear they won't be as competitive because European rivals receive generous government subsidies.
The new cheese imports will be in addition to more than 20 million kilograms of mainly specialty cheeses that are currently imported annually from Europe.
Saputo, Canada's largest dairy processor, has the product variety and size to survive the increased imports, but its chief executive said he fears the increased competition could be especially difficult for the country's small artisinale cheesemakers.
Meanwhile, he said the Montreal-based company (TSX:SAP) could return to Europe through an acquisition under the "right conditions."
The company closed its operations in Britain and Germany in 2013 after seven years because it didn't have the scale and product diversity to compete effectively.
Saputo said he wouldn't describe returning to Europe as "a long shot," but that the company's top acquisition priorities are the United States, Latin America and Oceania.
He said Saputo's entry into Australia with the purchase of that country's fourth-largest dairy processor has made it "a more serious bidder" for acquisition opportunities in New Zealand, a dairy-producing country that exports 90 per cent of its output — mainly into the growing Asian market.