Could new trade platform transform the Irish dairy market?
A new, independently-owned, online dairy trading platform has the potential to establish a more reliable world market milk price while revolutionising how Irish dairy processors sell their products overseas, its creators claim.
New-Zealand-based Cream aims to become the preferred global marketplace for the international dairy trade by providing a secure software solution which would allow Irish processors and co-operatives to sell their product direct to consumers around the world 23-hours a day, five days a week.
The Cream platform is tailored to each company/co-operative/processor, who will have control over what products they sell on the platform, what clients (that is, registered buyers) can access the platform and what products those clients can see.
Cream is designed for the dairy industry’s established, larger-scale sellers and buyers – not individual milk suppliers or consumers. Nor does it cater for high-end traders or stockbrokers, as no speculating takes place on the platform.
Next week representatives from Cream will be visiting Ireland for the fifth time in the last 12 months.
“We have met with many of the Irish Co-op’s and are in the final stage of on boarding several,” Kevin O’Sullivan, CEO of Cream Ltd, told Agriland.ie
“As the Irish market share continues to grow, new ways to access markets and communicate with customers are needed. The platform is a very cost effective way to engage with customers.
“We have found good sales people use the platform for the day-to-day price discovery and communication of sales interest and spend more time on the customer relationship. Ireland has a huge opportunity to become a much bigger and important player in the dairy world,” O’Sullivan said.
“Ireland in particular will have more volume to sell and can utilise the Cream platform to achieve this and to also potentially gain entry into new markets,” said O’Sullivan.
A Game Changer Or Just Another Dairy Trade Tool?
There is no limit to how much dairy product a processor can offer up for sale: the only commitment is an agreed amount of product to be offered for sale each year.
In addition, O’Sullivan says Cream works with each supplier to individually configure the platform for them.
“The supplier will still attract any premium received for product as the platform is completely branded as their own,” O’Sullivan says.
“As we are all aware, there can be counterfeit product offered on websites, but with the Cream solution the buyer knows they are getting genuine Irish dairy product as they are on the supplier’s own platform.”
Internationally, O’Sullivan says Cream has focused on the supply side and is aiming to have six manufacturing clients all live by June this year.
“We have confirmed engagements from New Zealand, Australia, U.S.A, South America and hopefully Ireland. These companies have buyers all over the world, with a real focus in Asia.
“We are aiming to have 20 manufacturing clients within the next two years. The buy-side from this would be in the hundreds, we would estimate.”
He added that on Cream platform, individual companies will have their own sales “solution,” including their logo and company colours.
Alternative To GDT?
Some dairy analysts have recently cautioned that European farmers and dairy companies pay too much heed to Fonterra’s Global Dairy Trade (GDT), mistaking it for the world milk price, whereas it is just one of many indicative factors of world demand.
Furthermore, Fonterra traded less than one-third of its products through the GDT auctions last year, while the GDT prices are heavily influenced by local business decisions and weather conditions in New Zealand.
O’Sullivan said Cream, however, is a “true marketplace” and complements Fonterra’s fortnightly GDT auction by being a five-day-a-week option for price discovery.
“We have live trials running now, with real transactions occurring.”
Cream provides its clients with a personally-branded, configured, internal e-commerce trade whereby they can offer their products directly to their customers in a “secure, reliable and user-friendly electronic marketplace.”
Alternatively with the GDT, five days prior to the start of each trading event, the Trading Manager confirms the quantities available and starting prices for the first round of bidding. Then, at the start of the auction each bidder enters the quantities they wish to purchase at the announced starting prices.
“We see the biggest growth coming from Europe. We hope to be able to confirm live sell users in Ireland very soon, which would mean the platform is being used all around the globe.”
According to its website, Cream has continued to attract significant financial backing from a number of private investment groups. Cream describes itself as not being an auction but a “true marketplace” for internationally-traded dairy product.
The initial products traded on the Cream platform are:
• Skim Milk Powder
• Skim Milk Powder
• Whole Milk Powder
• Instant Whole Milk Powder
• Anhydrous Milk Fat
• Butter Milk Powder
• Sweet Whey Powder
• Instant Fat Filled Milk Powder 28/24