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.


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