Saputo chief executive Lino Saputo has called on co-operatives to “right size” (adapt to market conditions) the amount of milk they produced, to help iron out fluctuations in supply and demand.

He said milk production should not outpace market growth of one and a half to two per cent a year.

But Fonterra’s Australia milk supply general manager Matt Watt said while Mr Saputo was entitled to his views, co-operatives helped create sustainable growth, right across the value chain.

“I think co-operatives straddle both farm-gate, production and markets,” Mr Watt said. “Demand for dairy is growing at a couple of per cent a year. One of the things we want to make sure is that farmers, as well as processors, participate in that growth.”

Fonterra supplier Kirsti Keightley, of Heywood, has a herd of 1100 cows and said singling out sectors of the industry seemed simplistic.

“I think the most important thing for the dairy industry in Australia is to work together, with one voice, and be clear about what our objectives are. We are in a period of massive change and we need to get in front of that change.

United Dairyfarmers of Victoria president Adam Jenkins said while he found the comments “interesting”, private companies also wanted to grow milk supply.

“If they had the chance, they would try and take another billion litres, if it was there,” Mr Jenkins said.

‘But I think what Lino has identified, quite clearly, is that we have such volatility in the system, overlaid with seasonal volatility, and that is causing the world dairy market some serious challenges. And that is causing challenges right from the farm gate, right through to the processing sector. He is right in that some of the elements of that need to be worked through. Now whether to pin it on the co-operatives, as such, is a big call.”