This week’s GDT auction in New Zealand saw prices for dairy commodities traded on the auction platform fall by just under 1% to an average selling price of $2,980/t (€2,575/t).

This latest fall leaves the benchmark dairy index at its lowest point in almost two years, following a string of negative auction results over the summer. Indeed, seven of the last 10 GDT auction have returned a negative result, although volumes sold would have been low, as this is the winter period in New Zealand.

The performance of some aspects of the GDT since May has been totally at odds with how dairy markets are performing in Europe and raises the question of just how relevant the index is for Irish farmers and co-ops anymore.

The divergence in dairy commodity pricing between Europe and New Zealand is best encapsulated in the price of butter, which fell 3% at this week’s GDT to hit $4,270/t (€3,700/t). Compare this with Europe, where butter is trading between €5,400/t and €5,500/t, or around €1,800/t more expensive.

A disparity also exists in whole milk powder (WMP) markets, where WMP prices declined 2% at this week’s GDT to $2,820/t (€2,440/t), which is the seventh decline in WMP prices out of the last eight GDT auctions. This leaves New Zealand WMP priced more than €400/t cheaper than product in Europe.

While the GDT has always delivered some form of price discovery for dairy farmers, its relevance to European farmers has waned significantly in the last two years. It’s time Europe developed its own form of GDT to be relevant to farmers here.