Buyers and sellers of organic cream found price transparency for the first time, thanks to quarterly auctions from Mercaris, the nation’s only organic and non-genetically modified organism data and trading company.
Mercaris held four auctions in 2019 through its online platform, overseeing the trade of nearly 100,000 pounds of organic cream. The two most recent organic cream auctions closed at $4.45/lb. and $4.65/lb., about 86% higher than conventional Class II butterfat prices.
“Price transparency can be a major frustration and a barrier to entry in the organic space,” said Lizzie Ekeberg, director of market operations at Mercaris. “Knowing that there are recurring auctions for organic cream encourages participation from buyers and sellers and ultimately brings more stability to those markets.”
Auctions are held in real time, and all offers and bids are visible. Each auction in 2019 saw an increase in participants, which included dairy processors, brokers, food companies and more.
“The organic dairy supply chain has its share of challenges, including competition from ‘alternative proteins’ and industry consolidation, among others,” Mercaris chief executive officer Kellee James said. “One take-away from our online auctions has been that there is still high demand from buyers for butterfat, even as organic fluid milk sales remain somewhat flat. That’s important information for everyone from dairy producers to [consumer packaged goods] companies.”
Mercaris will continue to host organic cream auctions in 2020 and plans to expand its existing product suite. The first auction of 2020 is scheduled for February.