100th auction proves GDT’s worth

20/09/2013

Fonterra’s GlobalDairyTrade passed a significant milestone on Tuesday with its 100th auction.

Global Dairy Trade Director Paul Grave says the 100th successful auction marks a coming of age for the platform which is now in its fifth year of trading and surpassed US$10 billion in aggregate sales earlier this year (July 2013).

“Achieving our 100th trading event proves the success of the online model.  It shows that Global Dairy Trade has matured to become an essential feature of the global dairy industry.  GDT now provides price transparency and highly efficient purchasing for more than 850 registered bidders from 90 countries,” Mr Grave said.

“The strong support for the platform shows we are meeting a real market need to find a robust reference price that reflects true levels of supply and demand in the market,” Mr Grave says.

The platform is now used by six global companies supplying product for sale.  This includes Fonterra (New Zealand), Dairy America (USA), Amul (India), Arla (Denmark), Murray Goulburn (Australia) and Euroserum (France). A typical auction event lasting around two hours will sell enough product to completely fill a container ship; amounting to around  2,500 standard twenty-foot containers, valued at between US$100 and $250 million.

Global Dairy Trade operates at arm’s length from its owner Fonterra.  Fortnightly auctions are conducted on behalf of GDT by Boston-based, NASDAQ-listed CRA International in accordance with market rules monitored by an independent advisory board of sellers and buyers. 

“We are delighted that Global Dairy Trade is today centre-stage of a vibrant global dairy industry which is experiencing annual demand growth of well over 2.5%.  We will be seeking to continuously improve our service as technology evolves over the years ahead,” Mr Grave says.

There was concern and scepticism from within New Zealand and abroad about the on-line auction system when it was first launched but this milestone proves it’s working and shows its worth to Fonterra, its shareholders and suppliers and customers.

The company trades only a small proportion of its product through the auction but it is a useful indicator of demand and price.

It’s also used as a benchmark by other companies here and overseas.

When we were in Holland last year the latest GDT auction results featured on the front page of a farming paper.


Verghese Kurien, milkman of India

28/10/2012

A reader alerted me to an obituary for Verghese Kurien who revolutionised India’s milk industry.

Verghese Kurien, who has died aged 90, did for India’s dairy industry what Norman Borlaug did for its cereal production, launching a “white revolution” which ended chronic shortages and turned India into the world’s largest milk producer; he became known as “the milkman of India”.

In the 1950s small Indian dairy farmers were dependent on Polson’s, a dairy giant founded in India in 1915, which by the Second World War had established a monopoly. Farmers had to travel long distances to deliver milk to the Polson dairies and often the milk went sour en route. The prices of buffalo and cow milk were arbitrarily determined and, because farmers were unable to sell their milk to any other vendor, they were generally paid a pittance.

During the war, a group of farmers from the Kaira district of Gujarat approached the Indian nationalist leader Vallabhbhai Patel complaining of their inability to send their milk production to the markets without being fleeced by Polson’s. He advised them to form a co-operative and supply milk directly to their main market in Bombay. In 1946, following a milk strike, the Kaira District Co-operative Milk Producers’ Union was born.

An engineer by training, Kurien became involved in the milk industry in the late 1940s, when he took a temporary job with the union, then still struggling for survival against Polson. With Tribhuvandas Patel, the then chairman of the union, he set up a modern milk processing plant and created a new dairy co-operative called the Anand Milk Union (Amul).

The success of the co-operative started a movement which spread rapidly in Gujarat. Subsequently the Gujarat Co-operative Milk Marketing Federation (GCMMF), an umbrella body, was formed under Kurien’s chairmanship to ensure that the different co-operatives did not compete against one another and to coordinate marketing under the Amul brand name. . .

Another initiative was the opening of the world’s first plant producing milk powder from buffalo milk.

. . . In 1970 he launched Operation Flood, a huge development programme with the objective of creating a nationwide milk grid linking 10 million milk producers through 96,000 dairy co-operatives, with consumers in more than 700 towns and cities. Over the next 25 years the programme made India the largest producer of milk and milk products in the world. Milk production increased from 20 million tonnes a year in the 1960s to 122 million tonnes in 2011. . .

The world is a better place for entrepreneurs like this.


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