Food inflation ‘still omnipresent,’ warns dairy heavyweight Agropur

MONTREAL • Despite hopes of a lull, inflation remains “omnipresent” across the supply chain of the Agropur dairy co-operative, its chief executive says.

Emile Cordeau has yet to see inflation level off on the ground, even amid data suggesting prices are coming back to Earth.

“We hear a lot about slowing inflation. What I can tell you is that at Agropur currently, on the contrary, inflation is still omnipresent throughout our entire supply chain,” he said during an interview in French from the sidelines of the co-operative’s annual general meeting Wednesday.

“Our inputs still have inflationary pressure. It hasn’t really changed on our side,” said the head of the outfit behind the Natrel and Quebon dairy brands as well as Oka cheese.

Several factors are adding pressure to Agropur’s profit margins. Cordeau pointed to the price of ingredients, transportation costs, labour scarcity and high interest rates. The chief executive believes inflationary pressures will persist well past 2024 in his industry, particularly due to labour scarcity.

“The labour shortage will not go away. So, there will continue to be significant pressure and competition to attract talent and attract labour. For us, it will be part of our daily life for several more years.”

Food inflation reached 9.8 per cent in 2022, its highest point since 1981. It slowed throughout 2023, but still persists at an above-target rate. Food inflation was 4.7 per cent in December, according to Statistics Canada.

As a result, households have changed their eating habits. Agropur said it had seen a decrease in cheese consumption in Canada and the U.S. “We don’t see cheese as a category that will decline in the future,” he added.

Cordeau said other shifts in consumption habits have been favourable to the co-operative’s activities in the private label sector, which is experiencing renewed popularity in grocery stores, in particular.

Agropur executives hope to mitigate inflationary pressures through efficiency gains, he said.

Meanwhile, Agropur has reduced its debt load to target levels after hitting a peak during the pandemic.

The Montreal-area-based dairy processor reported debt amounting to 2.4 times its earnings before interest taxes, depreciation and amortization for the fiscal year ended Oct. 28.

The co-operative also said it will pay $50 million to its 3,000-plus members across Quebec, Ontario and Atlantic Canada in the form of rebates and the repurchase of shares and debt securities, a nearly 25 per cent increase from 2022.