Dairy Report: Saputo Purchases U.S. Cheese Plants and Tariff Impacts

Dairy Report 10/30/18
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Just how big of an impact could trade tariffs have on the dairy industry?

A study by Texas A&M University shows that the impacts of trade tariffs and the potential loss of the Chinese and Mexican markets would be extremely costly to U.S. dairy producers. A 25% tariff enacted by China on U.S. dairy products resulted in a 42% drop in exports to the country between July and August.

The study examined three trade scenarios, estimating losses of $129.7 million, $798.5 million or $335.5 million in U.S. dairy exports per year. Not only would these scenarios eliminate jobs, but it could also cost producers $1.154/cwt.

Shipping some of their natural cheeses to Mexico, a Canadian dairy company, Saputo Inc., has made plans to purchase two cheese processing facilities located in New Mexico and Wisconsin. Costing the company $85 million, this will allow Saputo to expand its dairy processing footprint in the U.S.

Currently, the company operates a U.S. division that includes the Dairystar and Friendship Dairies brands and markets a number of products under the label, including: milk, cottage cheese, ice cream, creamers and whipped cream.