GAF Academy

Transforming the Global Dairy Industry with an Innovative Trading Platform

Today, internationally traded dairy products either are bought and sold on GlobalDairyTrade (GDT) — an innovative auction-based online trading platform — or are strongly influenced by transactions that take place on it. GDT is the centralized marketplace for globally traded dairy commodities, establishing reference prices used by the industry that arise from GDT’s regularly scheduled auction-based trading events. However, leading up to the initial GDT trading event in July 2008, industry expectations and acceptance of the concept were mixed. Previously, there had been nothing comparable to the GDT trading platform, so there were some misplaced views, including: (i) that auction-based competitive bidding would result in sales only to the lowest common denominator — i.e., that price would be bid only to the level of the lowest-paying customer with all the upside of higher paying customers lost; (ii) an auction could work only for pure commodity products and that it would not work for differentiated food products where the identity of sellers is important; and (iii) to some extent it was thought it would be tarnished with an “eBay image” where low quality, downgraded products were being disposed of at fire sale prices.

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