8 Jul 2009

Fonterra defendings global on-line auctions

12:47 pm on 8 July 2009

Fonterra is defending its global on-line auction system in the face of further criticism from a dairy farmer's representative.

Critics say monthly whole-milk powder auctions have had a negative influence on the international dairy market by helping to keep prices down.

The Ministry of Agriculture has challenged that view in a briefing to the Minister, in which it strongly backs the on-line trading system.

MAF says its analysis does not support the claim that Fonterra's auction has either caused the collapse of dairy prices or resulted in increased price volatility.

Federated Farmers dairy chair Lachlan McKenzie has dismissed MAF's analysis as superficial and repeated his call for an inquiry into the global trade and its effects.

But Fonterra says MAF has provided an independent view that reinforces what the co-op's been saying about its global dairy trade initiative.

Portfolio optimisation director Nigel Kuzemko says the auction system has provided Fonterra with another outlet for selling milk powder at a time of recessions when sales have been falling on world markets.

He says Fonterra is selling only about 10% of its exports on-line and it's still considering whether to expand the auction system to include other products besides whole milk powder.