Miles Hurrell: Fonterra chief executive Miles Hurrell says the three-way strategic partnership with New Zealand’s Exchange and the European Energy Exchange to take ownership of the GDT is good news for everyone, including farmers.
Fonterra is to enter into a three-way partnership with New Zealand’s Exchange (NZX) and the European Energy Exchange (EEX), which will see each take an equal shareholding in the Global Dairy Trade (GDT).
The partnership, which is expected to be completed by mid-2022, is subject to several factors, including approval of the boards, clearance from European or any other relevant competition law authorities and finalisation of transaction documentation.
Fonterra chief executive Miles Hurrell says the move to a broader ownership structure marks the next step in the evolution of GDT. He says the partnership will enhance the standing of GDT as an independent, neutraL and transparent price discovery platform and will give it a presence in prominent international dairy-producing regions. It will also create opportunities for future growth.
“This is good news for our farmer owners, unit holders and all dairy industry participants and is expected to lead to greater volumes being traded on GDT. It will bring more participants and transactions, stimulating further growth of risk management contracts available on financial trading platforms,” Hurrell says.
“We all know that dairy is one of the most volatile traded commodities.
“This partnership is another step in helping to manage this risk for everyone – from the farmer through to the customer at the end of the supply chain. A more liquid dairy trading environment allows for the growth of financial tools, which can be used by all participants to better manage price volatility.
“Our focus has been about securing the best partners, and NZX and EEX share our vision for a stronger, more liquid auction platform that benefits all involved. We are also closely aligned on future possibilities for GDT as the world’s most trusted reference point for dairy commodity prices.”
NZX chief executive Mark Peterson says the price discovery that GDT provides the international dairy industry is crucial for dealing with volatility and its associated risks.
“We see the expansion of the physical trading environment as both further strengthening existing financial contracts and enabling the creation of new tools and opportunities for dairy processors and end-users to manage price volatility. These offer clear benefits for New Zealand dairy farmers and customers around the world,” Peterson says.
EEX chief strategy officer Dr Tobias Paulun says that becoming a shareholder of GDT lines up perfectly with the EEX strategy of taking asset classes, which they already successfully serve to a global dimension.
“With our experience in operating Europe’s leading trading platform for dairy futures, but also with multiple spot contracts in the energy space, we believe that we can be of value supporting GDT’s growth vision,” Paulun says.
“At the same time, we can create value for the global dairy value chain by further improving price discovery and price risk management instruments.”
GDT director Dr Eric Hansen says that the addition of NZX and EEX as shareholders alongside Fonterra will enable them to build on their success in establishing a global brand and expertise in price discovery to create more opportunities for their customers.
“The strong alignment of all three shareholding partners to GDT’s purpose of credible price discovery will support initiatives to increase liquidity on GDT, attract new supply from prominent dairy producing regions and will strengthen GDT’s linkages to financial trading platforms,” Hansen says.
