Fonterra encourages others into web selling
Fonterra wants other large dairy companies to join its website auction for milk powder reports The Manawatu Standard. The co-operative is now selling about 20 per cent of the milk powder it produces on globalDairyTrade, but it wants to expand the web-selling mechanism. The trade manager of globalDairyTrade, Paul Grave, said web sales were a tool to manage global uncertainty over dairy prices.
“In forward sales, someone wins and someone loses. If a customer loses, they are not happy and Fonterra doesn’t want an unhappy customer. If Fonterra loses, our shareholders aren’t happy.” The price of milk powder used to change by a few hundred United States dollars a month, but now it can be US$600, Mr Grave said. “We can’t live with those fluctuations.”
He said Fonterra got globalDairyTrade under way, but it is run by Boston company CRA and is independent of Fonterra. The arms-length approach which Fonterra has should encourage more suppliers to the web auction, said Mr Grave. Bidders can’t see what other punters are bidding, or what price they will pay. All bids are in US dollars, and for product on the wharf in New Zealand, so they pay any extra delivery costs.
Sixty-five countries are involved, and 270 bidders all up, and 370 tonnes of milk powder have been sold through the web auction system.
