This week, Australian independent milk services company, Milk2Market, officially launches the Milk Exchange (MX) – a significant innovation for the Australian dairy industry, and a step closer to creating a truly transparent, digital supply chain for Australian milk buyers and milk suppliers.
The Milk Exchange is set to be a ‘game changer’ through the creation of the very first digital platform to buy and sell raw Australian milk. The Milk Exchange establishes a market for milk, where both milk sellers and milk buyers participate in an open trading environment, and in doing so benefitting both sides of the supply chain. As a digital platform it provides the elements of a marketplace – such as price discovery, transparency, accessibility, and the allocation of risk in the commercial relationship – between buyers and sellers.
The Australian dairy industry is only now catching up with other agricultural commodity sectors – such as beef, wool and grain – which not only have markets where commodities are traded, but also have digital trading platforms from where buying and selling are the new normal.
At a time when many dairy farmers believe they are not realising the true value of the product they produce, the Milk Exchange creates a competitive marketplace and provides greater information on factors affecting the value of milk. The platform sets a traded transparent price, giving farmers choice to increase value for their milk and supporting the management of their risk. Through the Milk Exchange, farmers now have a choice in managing their milk supply, putting farmers firmly back in the driver’s seat.
“Barriers and challenges are currently being deeply and acutely felt by the Australian dairy industry. We believe that anything that creates a more equitable, transparent market is a critical building block to ensuring a more sustainable, future-fit industry,” says Richard Lange, General Manager Commercial Development, Milk2Market.
Many of these key issues were recently identified by the ACCC, including bargaining power imbalance and information asymmetry in farmer-processor relationships. The new mandatory industry code of conduct proposal, announced by the federal government in May 2019, aims to deliver measures such as ending restrictive exclusive contracts, and banning mid-season or retrospective price cuts. The Mandatory Code legislation is yet to be finalised and will be subject to a round of consultation with industry. Many of these issues are ones that the Milk Exchange seeks to address.
In March 2019, Milk2Market published the Milk Price Calculator as a first step in providing simplified price comparisons through publishing easily comparable up-to-date pricing. The Milk Exchange now goes one step further in creating a more integrated digital supply chain for dairy. Future iterations will embrace blockchain technology and smart contacts as part of the digital supply chain process.
- To use Milk Exchange, all users (both buyers and sellers) must complete a registration process via www.milkexchange.com.au in order to be eligible to trade on the platform.
- Anyone seeking more information is encouraged to attend a free online webinar to learn how the platform works and to ask questions – register for the event at MilkExchangeWebinar.eventbrite.com
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