Apparently the Aussies are blaming Fonterra’s Global Dairytrade online auction platform for lowering the price of milk.
Interesting. If the auction is simply reflecting the true value of milk then the I feel no sympathy. This quote from the manager of the auction system sums up it’s purpose
Fonterra’s global trade managing director Kelvin Wickham said the auction was all about “the international market getting a transparent price” and all global dairytrade was doing was “making it more transparent more quickly”.
As an economist that is music to my ears. On the other hand here’s the quote from the Aussies
“Given things are bleak with the economic outlook, people are holding back on purchasing to see what happens with the auction,” Ms Bills said.
“Mostly, the price doesn’t recover. It is fine to want to have a transparent price system, but why not open at the closing price? If you put a price out there for something in an auction, people see it as a reserve.
“Buyers are waiting to see the price from the auction before they make their purchase.”
So basically they want the auction setup so that it props up the price of milk, can’t say I really have much sympathy for that view….