The Australian Milk Price Initiative (AMPI)

A fair, transparent and competitive market for Australian milk.

Introduction

Australian Dairy Farmers (ADF) has long-advocated for a trading platform that brings transparency to milk prices, increases competition for farmgate milk and enables dairy farmers to lock in prices with processors up to three years forward for some of their milk.

This platform is the Australian Milk Price Initiative (AMPI).

The AMPI ran its first spot market for milk, covering the three dairy regions of Victoria in March 2022. The trading was done on the Mercari platform, owned and operated by the Financial and Energy Exchange.

These spot markets deliver the transparency to milk prices necessary to enable a forward financial hedging market like those seen in New Zealand, the US and Europe.

ADF worked closely with government and industry to develop the AMPI and encourages dairy farmers to take advantage of the trading platform. Similar trading platforms are operating for other agricultural sectors, including wool and grains.

Not only does the AMPI empower dairy farmers when they sell milk, it will also increase transparency and build trust. There is no more transparent price signal than an open market price.

The AMPI will improve risk management across the supply chain with back-to-back pricing from customer to processor to farmer, providing the ability to lock in margins across the chain. Better margin and risk management enables better planning, which, in turn, drives investment and growth across the dairy supply chain. More investment means a strong dairy industry.

The spot milk market is available at 2.00-2.30pm (Sydney time) on two Thursdays of each month. Information and access to the market can be found at: https://riemann.com.au/products/

 

Benefits of AMPI

For Farmers

Take control of your milk price
  • The AMPI gives farmers more choice and control.
  • You can sell your milk to more than one buyer.
  • You can lock in some portion of your milk price up to three years out.
  • You can create more competition for your milk year-round.
Manage your margins
  • The AMPI allows you to lock in milk prices at the same time as you are making cost and investment decisions.
  • You can manage a margin, enabling better decision making and the ability to invest for growth.
  • With more certainty and better budgeting, funding and cash flows become more certain.
Know what your milk is worth at all times
  • Even if you don’t trade, keep an eye on the AMPI prices to help your business.
  • By knowing what your milk is worth at all times, you can benchmark what you are receiving, as well as plan for coming seasons

For Milk Buyers

Processors can manage milk supply and price with the AMPI
  • Run a milk price hedging program with suppliers: lock in some milk price 3+ years out against forecast sales.
  • Will let you manage your margins and gain new customers who value price certainty.
  • Become a processor of choice and increase milk supply and certainty by providing access to hedge tools.
  • Early adopters in providing farmer access to the AMPI can build flexible milk supply.
Liquid milk end users can have more price and supply certainty with the AMPI
  • Liquid milk buyers often feel stuck as a result of the way Aussie dairy currently prices milk – no price or supply certainty until the start of the season.
  • The AMPI can change this – with sellers making offers of milk every month up to three years out, liquid milk buyers have more choice when managing price and supply certainty.
  • Liquid milk buyers can also balance excess supply, potentially at a profit.
  • The AMPI is a great benchmark against other prices being shown by suppliers in the market
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