The co-op’s largest suppliers and GMP (guaranteed milk price) contract takers, Landcorp and Shanghai Pengxin have said they would like contracts extended well beyond one year to offset the milk price rollercoaster.

Fonterra’s head of GMP, Arron Atkinson, said he was hearing a similar message from some other farmers.

He also said there was no expansion to the present three year old scheme, but longer term contracts had been on his team’s radar and the viability and mechanics would be considered over the next six months.

Third party market participants are probably much better placed to offer that dynamism and liquidity.

Atkinson said Fonterra had a lot of thinking to do and it was not yet clear how big the market was for GMP, which so far matched contract milk volumes offered each June and December to customer purchase commitments.

Indicators that the market was bigger than thought could include farmer oversubscription for several GMP offer events in a row and more anecdotal talk from players about demand.

News that Fonterra is exploring expanding its GMP scheme won’t please all the co-op’s farmer owners. Atkinson admits the scheme has been contentious with some farmer shareholders interpreting what Fonterra calls “a farm risk management tool” as another assault by its board and management on cooperative principals. After three years, much of Atkinson’s time is still spent educating farmers that bidding to commit a portion of their annual milk production to a GMP could help farm budgeting in a topsy-turvy global dairy price market.

The bigger suppliers are more anxious to commit more of their production to a fixed price scheme.