Australian dairy farmers will benefit from the launch of the Australian Milk Price Initiative, the first Australian hedging market for milk, say dairy advocacy bodies.
The market was launched on March 3 on the Mercari platform, which is licensed to operate markets for a range of products including energy, commodity, environmental, interest rate and foreign exchange derivatives.
Federal Agriculture Minister David Littleproud said the market would allow dairy farmers to be more active managers of their milk supply, as they could sell their milk on the open market.
“I congratulate Australian Dairy Farmers and the Australian Milk Price Initiative on Australia’s first milk spot market,” Mr Littleproud said.
“This innovative approach is helping farmers build better businesses.”
Various bids across the three regions of Victoria were made, with prices exceeding $9/kg MS for the spot market. Individual months in the new season traded above $8/kg MS.
“These are very positive signs,” Australian Dairy Farmers president Rick Gladigau said.
Regional spot markets deliver the monthly price transparency necessary to enable a forward hedging market like those seen in New Zealand, the United States and Europe.
“There is no more transparent price signal than an open market price,” Mr Gladigau said.
“AMPI (Australian Milk Price Initiative) will improve risk management across the supply chain with back-to-back pricing from customer to processor to farmer, providing the ability to lock in margins across the chain.
“Better margin and risk management enables better planning, which, in turn, drives investment and growth across the supply chain.
“More investment in the supply chain means a strong dairy industry.”
In 2019, the Federal Government provided ADF with an election pledge of $560,000 towards the development of a milk trading platform.
“While the launch of the AMPI is an important step, the work is not over yet,” Mr Gladigau said.
“Effort is required in the future to ensure appropriate governance and operations and there is a well-designed education or extension program delivered to farmers and processors on how to participate in this or other trading initiatives and how this makes a difference to their risk management and bottom line.
“Ongoing investment and innovation are key to the future of the dairy industry.
“With an open market where farmers can choose who they sell their milk to, at what price and on what terms, the future is looking brighter.”
The dairy market will be available between 2pm and 2.30pm on two Thursdays of each month.
Information and access to the market can be found at: https://riemann.com.au/products/