Shifting half of New Zealand’s crossbred wool clip to higher value fine wool contracts could boost the economy by about $2 billion, says NZ Merino Company (NZM) chief executive John Brakenridge.
The company says positive currency movements have contributed to the increased contract price – up from $7.15/kg on July 1 and $1.25/kg above Wools of NZ’s contract price last season.
“From my point of view, as a grower, this contract is very timely in what farmers need for profitability, and it is an indicator that if we get ourselves organised as growers we can influence the returns we get for growers,” Wools of NZ chairman Mark Shadbolt told Rural News.
“Passing on the benefit of the exchange rate is something new for farmers, and in previous models it would have been sucked up by someone else before it got to the farmgate.”
He says the contract is open to all NZ wool growers until August 31, 2015 for lambs wool 28-31.5 micron, produced in the 2015-26 season.
“This is a real and meaningful market-linked contract for lambs wool connected directly to products in the market where demand is growing alongside the price. The WNZ Laneve traceability and onfarm integrity programmes are all parts that assist our brand partners to grow their businesses,” says Shadbolt.
“This is not a copycat or procurement contract and I ask growers to consider the timing of the contract and the pricing points that distinguish WNZ as a sales and marketing company.”
Shadbolt says their market, rather than procurement contracts, have shown a benefit to growers of about $1/kg for the last three years.
“That’s a good indicator of the progress being made in the market. As a wool trader you wouldn’t get that benefit feeding back to the growers.”
Shadbolt says the volumes are increasing each year and the volume this year is at a level where the company needs to open it to the wider industry beyond its shareholders to ensure it fulfils its contracts.
“That indicates there is a lot of demand for the product the lambs wool is made into and is a strong indicator that our market strategy – alongside our brand partners – is working well.”
He says this contract, offered under WNZ’s Laneve brand, reinforces the increasing importance of integrity products traceable back to farm of origin.
“It also endorses the value of our brand partner relationships and our marketing and technical capabilities.”
WNZ shareholders have had first opportunity at the contract and the company is now offering it to all NZ wool growers.
“The volumes required are significant and the support by shareholders has been very encouraging,” says Shadbolt.
Interested growers are encouraged to contact WNZ directly.