Seller Representation on Advisory Board
Consultation paper. August 2013
Introduction
1. This paper proposes criteria for how seller representatives to the GDT Advisory Board will be appointed in
future.
2. A key message is that GDT proposes to use an objective approach similar to that used for selecting bidder
representatives. Under the proposed approach, seller representatives would be selected in order of their
trading volume on GDT subject to ensuring a distribution of representatives across the major milk supply
regions.
3. No change to the GDT Market Rules is required to implement the proposed criteria. However, GDT would
welcome comment on the proposal from any interested party.
Background
4. The Advisory Board comprises five bidder members and five seller members. Until now, GDT’s process for
selecting the seller representatives has been to offer appointments in order of the first five companies to sign
the Participation Agreement and pay the Seller Establishment Fee. With the first of the seller terms expiring
in April 2014 and more than five sellers on GDT, there is interest in how the next round of seller
representatives will be determined.
5. GDT previously designed an approach for selecting bidder representatives that is objective, easy to
implement and ensures a range of views and opinions are represented on the Board. Selection is based on
three factors:
a. Bidder’s trading volume through the platform;
b. Achieving a distribution of bidders across three broad regions of Asia & Oceania, Middle East &
Africa, and Americas & Europe;
c. Achieving a distribution of bidders across three broad product categories of Cream, Powders, and
Other.
6. The selection process is designed to maximise the range of different region/product combinations
represented (for example, avoiding two bidders both representing the same region and same product).
Further information on the selection process and on the role of the Board members is available from the GDT
Information Website at www.globaldairytrade.info/resources.
7. In designing the new process for selecting seller representatives, we have taken into account three key
differences between the supply and demand sides of the dairy industry:
a. The number of GDT sellers is much smaller than the pool of bidders;
b. The major supply regions differ from and are geographically more concentrated than the demand
regions;
c. The product distinction is less relevant as most sellers process raw milk into combinations of
products covering all of the Cream, Powders, and Other product categories.
8. These differences have led to the selection process described below.
Confidential to Global Dairy Trade Holdings Limited
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GlobalDairyTrade
Method for selecting seller representatives
9. GDT proposes that the process for selecting seller representatives is to offer membership of the Advisory
Board to those sellers who trade the most value through the platform subject only to ensuring broad
representation across a range of geographies. The selection process makes no reference to the types of
products offered by a seller.
10. The proposed approach is as follows:
a. Each seller would be assigned a region according to:
i. Seller’s largest source of supply offered on GDT over the 12 months prior to the month of the
selection process;
ii. The three regions would be defined as: (a) Americas; (b) Europe, Middle East & Africa; and (c)
Oceania, Asia & Rest of World (Americas includes all of North & South America and Latin
America. Europe, Middle East & Africa includes Eastern Europe and Russia).
b. The first three sellers would be selected as follows:
i. The first seller selected is the seller with the largest offer quantity over past 12 months;
ii. The second seller is the next largest seller who is in a different region from the first seller;
iii. The third seller is the next largest seller who is in the last remaining region not covered by
the first two sellers.
The first three sellers will be sufficient to ensure each region is covered by one seller, as
illustrated below:
Example only:
Americas
Europe, Middle
East & Africa
ii
iii
Oceania, Asia
& Rest of World
i
c. To make up to five sellers, the last two seller representatives will be selected as follows:
iv. The fourth seller is the next largest seller across all regions;
v. The fifth and last seller is the next largest seller who is in a region not covered by the fourth
seller.
The end result will be that some regions will be covered by more than one seller, as illustrated
below:
Example only:
Americas
Europe, Middle
East & Africa
ii
iii
iv
Oceania, Asia
& Rest of World
i
v
11. GDT considers that the above approach will provide an objective, easy to implement process that will ensure
a range of seller views and opinions are represented on the Board. The Advisory Board has also expressed
support for the proposed approach.
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GlobalDairyTrade
Submissions
12. GlobalDairyTrade invites submissions from any interested party on the proposed approach described above.
13. Submissions should be made in writing to [email protected] with “Submission on seller
representation on Advisory Board” in subject line. Submissions close on Friday 23 August 2013.
14. If adopted, the new selection process would be used in April 2014 when the Advisory Board appointment
terms of existing seller members come to an end.
Confidential to Global Dairy Trade Holdings Limited
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