Quebec Dairy Producer Agropur Rethinking New Projects Amid Economic Uncertainty

Quebec dairy giant Agropur is considering a strategic shift in its investment plans in light of potential economic turbulence triggered by looming tariff disputes with the United States. The cooperative, one of Canada's largest dairy producers, is taking a cautious approach towards its future projects.

At a recent shareholder meeting, Agropur CEO Émile Cordeau attributed the delay in some projects to the current economic uncertainty. One of the key initiatives at risk of postponement involves enhanced processing capabilities for non-fat solids, a by-product of milk.

Cordeau highlighted Canada's deficiencies in processing and transforming such ingredients, a shortcoming exacerbated by recent infant formula shortages. Despite these challenges, Agropur announced a financial uptick in 2024, reporting an 11.7% rise in earnings before interest, tax, and amortization, alongside a 6.8% jump in sales, reaching $8.8 billion.

Additionally, Agropur has significantly reduced its debt levels, currently standing at just two times its earnings, improving from a high of 8.3 times during the peak of the COVID-19 pandemic. This reduction provides Agropur with greater flexibility to pursue new opportunities.

However, Cordeau noted that ongoing debates surrounding supply management could introduce further unpredictability, especially under pressure from the U.S. to modify Canadian market access for American dairy products.

Amidst the uncertainty, Agropur's cooperative model is poised to adapt to any changes in the trade landscape. With over $60 million set to be distributed among its members, Agropur remains committed to navigating the challenges posed by the current economic context.