Arla Foods trading on global dairy platform

Arla Foods will begin offering dairy products on GlobalDairyTrade from 3 April 2012. With Arla Foods’ participation as a seller on GlobalDairyTrade, access to bidders around the world has been expanded, and a tool to improve the challenges of price risk management in a volatile dairy sector becomes available for more market participants.

Acting in a global market, and recognising the need to achieve prices that will ensure that Arla Foods pays a competitive milk price to its cooperative owners, joining an online dairy commodity trading platform like GlobalDairyTrade marks the opening up to a so far unused source of potential export growth.

“We believe that the growth potential on the European markets will continue to be under pressure in the years to come, and we are therefore increasing our focus on the growing markets in the Middle East, Africa and Asia. A part of our strategy is to conduct an efficient trading business on those markets. The GlobalDairyTrade auction platform is one of the tools we intend to use to reach and service new and present customers in a cost effective way. We believe that customers will appreciate the opportunity to source Arla Foods products on the GDT auction platform,” says CEO of Arla Foods Peder Tuborgh.

GlobalDairyTrade was established as a single-seller auction in July 2008, and sold whole milk powder once a month. In October 2011, DairyAmerica, representing four major US producer-owned dairy co-operatives, joined GlobalDairyTrade. GlobalDairyTrade has become a multi-seller, multi-product trading platform with two auctions per month, and the online auction is trusted by buyers as well as sellers to transparently and efficiently discover a fair and market-clearing price for a total of seven different categories of dairy food ingredients traded globally.

GlobalDairyTrade has sold more than $5 billion until now. Some 700,000 metric tonnes of products are traded annually, and there are approximately 500 bidders registered from 80 countries around the world. It is operated independently from Fonterra, and its role is to match buyers and sellers that are all participating under marketrules that lay the foundation for other new sellers to join GlobaDairyTrade.

General manager of GlobalDairyTrade, Paul Grave says that Arla had been a leader in helping to develop the market rules and has now become the fourth seller to formally join the auction platform. “We are delighted that Arla as a leading European and global dairy company has decided to participate in GlobalDairyTrade and play a part in shaping its future,” Grave says.

Arla Foods will start offering Skim Milk Powder (SMP) Medium and Low Heat products and then, over time, other products will be evaluated and added.