Caisse de dépôt et placement du Québec has teamed with dairy cooperative Agropur to launch a $40 million co-investment platform supporting investments into innovative dairy enterprises in the region.
The pair wrote that each party will contribute C$20 million ($15.94 million; €12.82 million) to support minority investments in small- and medium-sized enterprises in a sector that each sees as a key driver of Quebec’s economy.
“The objective is to invest in innovating businesses offering products, packaging or technologies linked to the dairy industry,” Agropur vice-president of strategy and innovation Simon Olivier told Agri Investor.
Longueuil, Quebec-headquartered Agropur, for which CDPQ led a C$300 million funding round in late 2015, is a cooperative of 3,200 dairy farmers established in 1938 that processed more than 6 billion liters of milk last year. The announcement of the CDPQ platform came as Agropur reported earnings for the fiscal year ending at the beginning of November, reporting a 7.9 percent year-on-year increase in earnings to C$441 million. Agropur attributed the increase to higher cheese prices and volumes exported to the US.
“Through our forward-thinking efforts, we aim to anticipate the needs of our customers and create the dairy products of tomorrow,” said Agropur chief executive Robert Coallier.
The dairy platform is the latest in a string of recent agriculture-related investments for the C$286 billion CDPQ. In April, it launched a C$127 million fund to offer investments of between C$1 million and C$30 million to businesses that can improve regional farmers’ access to new technologies across a range of sub-sectors, including dairy. In March, it also made a majority investment in Datamars, a Swiss company that produces radio-frequency identification devises used to track cattle.
CDPQ’s increase in support for Canadian dairy comes as the sector has emerged as a key sticking point in ongoing NAFTA renegotiations.
“We have some serious issues with the Canadian dairy industry”
Tom Vilsak, US Dairy Export Council
At Peoples Company’s Land Investment Expo is Des Moines, Iowa last month, Tom Vilsak, Secretary of Agriculture under US President Obama and current president of the US Dairy Export Council, criticized Canadian support for its dairy sectors. One of every seven milk tankers on US roads are used to bring supply to export markets and burgeoning trade in dairy already supports 100,000 jobs, according to Vilsak. As such, Vilsak said that renegotiation of NAFTA presents both a challenge and an opportunity for US dairy.
“We have some serious issues with the Canadian dairy industry,” said Vilsak, who went on to describe a supply management system that he said creates “artificial support” for the industry. “We’re encouraging the administration, and the administration has been supportive of this, to say to Canada: ‘You need to open up your market. You need to reduce those incredibly high tariffs and you, frankly, have to have more transparency in your system, because you continually create new pricing systems that reward your producers, protect your system, and basically penalize the rest of the world’s producers.’”
Amid a surge in global butter consumption brought on by new research suggesting it is not as harmful to health as previously thought, Vilsak said, the Canadian government has created support mechanisms that he described as subsidizing exports of excess on global markets.
“As we renegotiate NAFTA, we want to make sure that part of that negotiation is an easing and a reduction of tariffs and barriers and an elimination of these artificial standards and structures that are really impeding free trade.”