Roger Massicotte is the president of Agropur (since February 2019) and has been a member of Agropur’s board of directors for 16 years, representing the Mauricie-Portneuf region. He owns Ferme Massicotte Holstein, in Champlain, Quebec, with his spouse, Maryse, son Pierre-Luc and daughter-in-law Katrine. The farm has 350 Holsteins and 250 acres in direct-seeded crops. In 2014, the farm was awarded the Farm Transfer Award from La Coop fédérée.
Progressive Dairy Editor Lora Bender recently interviewed Massicotte about the cooperative’s recent member input sessions and its vision for the future.
What changes have you witnessed over the years with Agropur?
MASSICOTTE: Since the co-op was founded in 1938, our dairy producer membership has prided themselves on developing a unique business model based on solidarity, democracy and resource pooling. Year after year, we create value in communities across the country and return a dividend to our members, based on their annual milk production and the cooperative’s earnings. As our members proudly put it, “We’re just as much a business as any other, but we’re not just a business like any other.”
From 2013 to 2018, our cooperative pursued an ambitious $3.6 billion acquisition and investment drive, split 50-50 between Canada and the U.S. It was a lot to bite off, but the opportunities were there, and we seized them. Then, in 2018 and 2019, we experienced a significant decline in earnings, particularly at our Canadian operations. The business was no longer profitable enough to enable us to reduce our debt, as we had planned, so the board of directors and the new management team adopted a clear strategic direction to turn things around.
Today, we can proudly say our situation has improved considerably. After the first six months of 2021, our debt was down by nearly $1 billion compared with the same date last year, and our earnings were up 77%.
How has technology and innovation played a role in your day-to-day business?
MASSICOTTE: Technology and innovation have been critical in improving the quality of our products, from farm to table. They have been equally important in producing solutions to the challenges of sustainable development, greenhouse gas reduction and animal welfare. We are making steady progress in modernizing our processes, upgrading our equipment and introducing new technology.
This has been accompanied by an important shift in how we approach our customers. Not so long ago, we would develop products and offer them to customers. Now, we ask them what they need, and we develop it together – this is the basis of our B2B approach. At the same time, consumer expectations are changing quicker and quicker. Consumers want distinctive products, so we must innovate to meet these new needs. And we’re doing it, for example, with our new line of Natrel products.
Investing in IT is also essential for improving our processes, such as transportation and warehousing logistics, and managing our human resources in a forward-looking and efficient manner.
What do you see for the future of dairy processors?
MASSICOTTE: We are operating in a mature market environment in Canada. Growth prospects are rather limited, and the bulk of the processing sector is dominated by large transnational businesses. Overall demand for our products continues to edge up, but the nature of the demand is shifting in a major way: “From milk we drink, to milk we eat.”
In a competitive environment, we must execute flawlessly, streamline our business model, cut costs, apply a winning business model and be constantly on the lookout for growth opportunities, especially in value-added products. And, of course, we must be responsive to the demands of the market, which in our case means both business customers and consumers. We therefore have no choice but to innovate, create new products and new ways of doing things. We must bear in mind that, increasingly, our customers expect us to commit to doing better when it comes to sustainable development and animal welfare.
What are the most impactful changes the cooperative has experienced over the last few years?
MASSICOTTE: There’s no question that the trade agreements have had a major impact on our activities in Canada. The concessions contained in the agreements will increase the market share of foreign products in Canada from 10% to 18%. The situation is particularly tough when it comes to fine cheese. The agreements also make it more difficult to export our solids non-fat.
Dairy processing and food distribution are both highly consolidated. We have decided to focus on what we do best; hence we have made it our mission: “To become a North American leader in B2B.” Like our competitors, we must diversify our markets and operations. For us, this means seizing growth opportunities, especially in the U.S. market, where they still abound. At the same time, we are alert to new consumer trends.
Of course, the pandemic was a major challenge for our farmers, employees and customers. We had to adapt nimbly to a sudden shift in demand from hotel, restaurant and institutional (HRI) sector to retail. Recently, we have had to adjust again as the pendulum has started swinging back.
Every five to 10 years, Agropur conducts member input sessions. What have you learned from this year’s sessions?
MASSICOTTE: In keeping with its values of transparency, openness and democracy, the cooperative conducts a strategic consultation every five years. It’s a key process in which we meet with our members to get their opinions on our major directions for the coming years. The input from members then informs the board’s decisions – for example, the decision to expand into the U.S. emerged from the 2002 strategic consultation.
This spring, a series of online activities drew 1,259 participants for lively discussions around five themes:
- Cooperative values and principles: Our members take great pride in Agropur because they are involved in their cooperative and there is a strong sense of cohesion and belonging. They are proud to belong to a group that takes their product from the farm gate to market.
- Number of members: We think we can add more members, but will have to establish clear parameters. Our members don’t want to compromise what they’ve built.
- Increasing member capitalization: This could potentially create problems of inequality. The more a member invests, the more important they become. This would create growing disparities between members, which is not the idea behind the cooperative. There is no real desire to go further in this direction.
- Use of cash flow: The members are focused on the long term and recognize the need to continually invest to ensure growth. The patronage dividends are important, but they’re not the most important thing.
- Members’ role in keeping our “Better dairy. Better world” promise: While they actively support sustainable development, our members want us to do more to publicize the efforts they are already making. They understand that the marketplace is changing and the consumer is calling the shots. They want to have a better understanding of what the market demands so we can all make the best decisions on sustainable development.
A final report on our members’ views and the resulting recommendations was submitted to the board of directors and the management team, which will be responsible for implementation.
What future initiatives do you see for the cooperative?
MASSICOTTE: Our members discussed sustainable development issues at length during the strategic consultation. They are aware of the new market demands and want their cooperative to meet them. We will support our members and promote ways to do better on animal welfare and environmental protection. We will provide encouragement and support in the form of expertise and publicize our members’ unflagging efforts in this area.
At the same time, improving our industry’s record on sustainable development is a very complex matter that requires coordination among all partners in the industry. In the coming months, various initiatives will be launched with our customers and the producer organizations. Agropur intends to be part of the solution.
When you think about the future of Canada’s dairy industry, what makes you most excited?
MASSICOTTE: Our industry is operating in a fast-changing environment. We must be attentive, responsive to our customers and to our fellow citizens’ new demands about the way we practice the dairy farmer profession, the way we process our products and the way we market them.
It is also necessary to adapt to the new lay of the land when it comes to our supply management system, with the massive influx of new foreign products and the increased difficulty of exporting some of our byproducts. Bear in mind, Canada has opened over 15% of its market to foreign producers, without any real trade-off in our export markets. This amounts to nearly 800 million litres of milk that will no longer be produced by our Canadian farmers or processed at our Canadian plants. To give you an idea of the scope of the challenge, this is equal to the output of more than 1,200 average-size Canadian farms or 30% of the milk we process in Canada.
Beyond the opening of our markets, the concessions in the CUSMA mean that Canada has compromised its food sovereignty by:
- Eliminating Class 7, which provided processors with a competitive alternative to imported ingredients
- Capping Canadian exports of solids non-fat in the form of skim milk powder and milk protein concentrate, not only to the U.S. but to the rest of the world
- Subjecting all changes in milk classification and farm prices to U.S. scrutiny
Adapting our industry will take an enormous effort, and it is imperative that no further concessions be made in the future. Our industry needs stability and the tools to consolidate and grow.
The response to the challenges facing our industry starts with our cooperative. We are producers and processors – we know our business, we have deep expertise, and we are plugged into our markets, so we are strongly positioned for the future. Some issues, however, require a whole industry-government response, such as what to do about solids non-fat surpluses. The entire industry will have to work together to find solutions with the support of government. We are always on the lookout for opportunities, and we continue discussing them with the marketing boards. To keep our organization sustainable, all the projects under consideration must meet our performance and financial risk standards.
Is there anything else you would like to share?
MASSICOTTE: Our members and partners will have to rise to many challenges in the coming months: dealing with a pandemic that is not yet totally under control, adjusting to trade agreements that have major impacts, addressing new expectations from consumers and citizens who are more sensitive to the way their food is produced, the industry’s high level of consolidation in Canada and limited growth prospects, the labour shortage, etc.
True to its historic mission of processing the milk of its 3,000 members and giving them a fair return on the business, Agropur wants to be a partner of choice. We are determined to do our part to ensure the dairy industry:
- Remains a driver of development for Canada’s economy and its regions
- Actively contributes to our country’s food security and autonomy
- Meets the challenges of sustainable development and the new expectations of citizens and consumers
- Continues to invest, innovate and develop new products
- Remains an industry that is attractive to employees and capable of drawing top professionals
- Works together on issues that require industry-wide solutions
We are both producers and processors – we know our business, we have deep expertise and we are plugged into our markets, so we are strongly positioned for the future.
