October 29, 2019
National digital milk market launches in Australia
Australia's first national digital milk market, an open market selling platform, was launched last week, farmonline National reported. Milk Exchange is similar to other electronic livestock marketplaces, such as AuctionsPlus, and online grain trading facilities.
30 dairy companies have so far expressed interest in the platform.
Milk Exchange has been billed as a game changer in an industry where dairy farmers are often frustrated by a lack of true market price transparency and are locked into secret contracts committing their production to specific processors.
With the country's milk production volumes significantly depleted by drought, Milk Exchange will allow raw milk buyers and sellers to join an open trade, or at least get a broader picture of price and demand indicators for any spare supplies on offer.
Smaller processors who have specific delivery, milk quality or provenance requirements, or who often depend on their milk supplies coming second hand from major milk companies, are expected to go direct to producers if supplies are on offer.
Australian Dairy Farmers (ADF) has welcomed the prospect of more price transparency for milk suppliers, as was strongly recommended by last year's Australian Competition and Consumer Commission inquiry into the dairy market.
"We haven't fully analysed all that the Milk Exchange might deliver, but we definitely support any initiative providing greater market options to dairy farmers," said ADF chief executive officer, David Inall.
"People in different areas of the supply chain have differing ideas about what's needed, but it seems about the right time for something like the Milk Exchange to emerge from the pretty foggy times our industry has experienced."
Melbourne-based milk services company, Milk2Market, is behind the new market platform.
In March the company started publishing a milk price calculator, offering simplified comparisons on processors' current prices.
The Milk Exchange is now embarking on its next stage of creating a more integrated digital supply chain, which is intended to be further enhanced with blockchain technology and smart contracts.
To use Milk Exchange, buyers must agree to credit checks and possibly pay an initial advanced sum as a commitment to the trade, plus A$1000 (~US$690) transaction fees and a management fee.
Sellers will be vetted to ensure they have an acceptable three-year history of meeting consistent supply and milk quality expectations.
Sellers don't pay any transaction costs, but will need to commit to a minimum supply of 400 litres of daily milk pick up for a minimum of one month.
Their identity will not be revealed to buyers on the open trading platform.
Once sold, all milk transaction values will be published on the Milk Exchange.
Dairy had been relatively slow to catch up with other agricultural commodity sectors such as beef, sheep wool and grain, which had moved on to digital trading platforms.
Meanwhile the new mandatory dairy industry code of conduct proposal, announced by the federal government in May, was likely to result in the ending of restrictive exclusive contracts, and the banning of mid-season or retrospective price cuts, farmonline National said.