Milk prices could jump after Scotsburn deal: union

The head of a union representing milk plant workers says recent changes in the industry will see milk prices go up.

Unifor says Saputo created artificially low prices

Saputo said the Scotsburn fluid milk business generates around $160 million in sales annually. (iStock)

Nova Scotians could pay more for milk after a recent shakeup in the industry, predicts a union representing milk plant workers.

Scotsburn Co-operative Services Limited sold its fluid milk business to Saputo Inc., Canada's biggest milk processor, for $61 million earlier this month. The sale included the Scotsburn plant in Sydney.

Chad Johnston, national representative for Unifor in Atlantic Canada, said Saputo has been creating artificially low prices for milk.

"They stock the shelves, for example, with Costco and the low price is $5.19. Well you can't produce or make a profit at $5.19, but what you can do is try to gain market share," he said.

"As a result we think prices will likely go up for consumers for milk because Saputo would have no real need now to try and gain market share."

Johnston said Saputo has deep pockets and can invest in the latest technology.

"But will that benefit the consumer? I don't think so because they will each focus on their particular markets of interest," he said.

"By reducing a competitor out of the market we think you will actually see the low end of price disappear and it will probably come back to where it was prior to Saputo coming into the market."

Johnston said he's optimistic Saputo will keep the Sydney plant open.

About 70 people work in the plant and 15 more in merchandising.