MONTREAL -- Canada's largest dairy processor, Montreal-based Saputo, is hoping to spur the adoption of global animal welfare standards by refusing to buy milk from farmers that don't treat their animals humanely.

The change is part of a new animal welfare policy the company released Monday, nearly a year after it became entangled in a controversy when an undercover video was made public showing cows being punched, kicked and beaten with pipes at one of its suppliers.

"It raised a lot of comments and questions and concerns especially here at Saputo about what our policy is and if it is robust enough," CEO Lino Saputo Jr. said in an interview.

Chilliwack Cattle fired eight employees after animal rights group Mercy for Animals released a video that showed young men beating the cows.

Saputo (TSX:SAP), one of the world's largest dairy processors, says it wants all farmers and employees to sign yearly codes of conduct and third-party auditors to review the practices of farmers. The company said it is also working with universities to improve education on animal welfare.

Although federal law only allows processors to refuse to accept milk over "quality issues" including health concerns, Saputo said it will not accept milk from sites where animals have been mistreated, as it did for two days last summer when a video surfaced depicting animal abuse at an operation in Chilliwack, B.C.

"If we have any evidence of animal cruelty, whether it's mistreatment or neglect that's causing pain or injury or suffering to any of the cattle on the farms, we will stop taking milk from that farm," Saputo Jr. said.

Delivery of milk could be permanently ended if farmers refuse to improve animal practices as verified by third-party inspectors, he added.

Mercy for Animals praised Saputo for its new policy, which also commits to eliminating the practice of cutting or docking the cow's tail, administering pain control when dehorning cattle and reducing stress on cows through low-energy animal handling methods.

"Given that Saputo is the largest dairy processor in this country, I think it sends an incredibly strong message to all dairy farmers that any form of cruelty will not be tolerated," executive director Krista Osborne said from Vancouver.

She said she expects other large Canadian dairy producers to follow suit and join three of the world's largest dairy companies -- Nestle, Leprino Foods and Great Lakes Cheese -- which have recently announced similar animal welfare requirements.

But Osborne said there are some remaining questions, such as when the new policy will be implemented, whether the auditors will be independent, and whether the inspections will be random.

"This is an excellent step forward. We are heartened by it but it by no means is complete at this point."

Saputo Jr. also said he'd like to see stiffer penalties against people who commit cruelty to farm animals.

"We'd like the standards and the practices to have some bite to it and some consequences for those that are going to contravene those practices."