On the sidelines of the 2020 Australian Dairy Conference , Milk2Market Head of Corporate Development Richard Lange said the company’s new Milk Exchange had received a large volume of registration applications and enquiries from both farmers and processors.
“The current milk shortage is clearly a key driver of the strong response to the opening of the Milk Exchange.”
Lange said strong farmer interest in the Milk Exchange was also a sign of farmers’ growing confidence that higher profitability can be achieved through commercial as well as technical innovation.
The Milk Exchange offers farmers a traded transparent price, and the choice of managing their individual risk and accessing higher value for their milk.
“Selling some or all of their milk on the Milk Exchange allows farmers to manage their risk according to their individual circumstances and to back in their operational productivity improvements by accessing better returns.”
“The way the dairy industry has operated to date – where farmers commit a whole year’s production at an ‘annual price’ – has managed risk in a blunt way that left value on the table.”
Lange said the Market Exchange for the first time gives the dairy sector a functioning market that allows farmers to capture greater value in times of high competition for milk.
“Farmers can’t access full value and returns that match the risk they take unless they get fair and transparent pricing and the opportunity to sell to whichever buyer values their milk the most.”
“The current spot price is over 60 cents per litre and the average contract price is under 50 cents. The Milk Exchange gives farmers a way to access some of that upside.”
The commencement of the Milk Exchange means that Australian dairy farmers will go from only having access to local buyers, to having access to buyers all over the country.
“The Milk Exchange is a natural evolution for the Australian dairy sector, bringing it into line with other agriculture sectors. In a real market, sellers help set the price. They don’t just take it.”
Lange said that processors were embracing the Milk Exchange because it will benefit them as well as farmers, directly as a supply channel and by helping to create a more efficient market in which farmers can profitably produce more milk.
“Lifting profitability across the dairy industry requires that processors get more milk volume. This requires that farmers can capture greater value from their hard work.”