Wednesday, 17 February 2016 19:29

PGP aims for stronger wool returns

Written by  Pam Tipa
New Zealand Merino Company chief executive John Brakenridge. New Zealand Merino Company chief executive John Brakenridge.

A significant lift in strong wool prices is the main aim of a newly announced industry and Government-backed research project.

New Zealand Merino Company chief executive John Brakenridge says they want, in 10 years, to see 40% of the strong wool bales sold at substantial premiums over long-term historic prices.

This is one goal of the new Primary Growth Partnership (PGP) NZ Merino signed last week with the Ministry for Primary Industries (MPI).

"This is ambitious, but we believe it's achievable," Brakenridge says.

The expected benefits from the new 'Wool Unleashed' ('W3') programme will create a strong foundation and path for the future growth of the wool sector, he says.

MPI has signed the seven-year $22.1 million contract with The New Zealand Merino Company. The industry and the Government will each contribute $11.05m under the PGP.

Primary Industries Minister Nathan Guy says this wool could be adding an extra $335 million to NZ's economy by 2025.

Brakenridge says W3 will apply the New Zealand Merino Company's experience in fine and mid-micron wool in establishing contracts with premium brand partners and developing new uses and markets for strong wool.

"We've already had considerable success in these areas through the New Zealand Sheep Industry Transformation Project (NZSTX), our first PGP programme, which is focused on fine and mid-micron wool and is due to wrap up in 2017.

"NZSTX used product differentiation to generate better grower returns for fine wool fibre, meat and other products, and production science projects in genetics, animal health and forage production.

"We'll be looking to build on our success in NZSTX by turning our attention to the strong wool industry and driving increases in profitability across the value chain."

Brakenridge says the programme will be delivered through four work streams.

"The first, Social Licence to Operate, is to review and improve onfarm production practices to respond to high-end consumer preferences, such as traceability, low chemical use and quality standards.

"The next work stream, Crossing the Chasm – Commodity to Branded Experience is to develop and implement a system that connects producers with markets. This will enable producers to respond to market preferences.

"Another work stream, Blue Ocean – Market Driven New Uses and Users for Strong Wool, is to identify and develop new wool products for niche markets through a collaborative effort with growers, research providers and market partners.

"The long-term sustainability of the strong wool sector may require a transition to non-traditional uses of wool, and market drivers identified by this work stream will guide our direction and new product development.

"The final work stream is called Primary Sector Extension. This will involve collaborating across the primary sector to deliver cross-sector shared knowledge and practices."

Justine Gilliland, MPI director investment programmes, says the programme aims to secure a premium for strong wool, increase onshore processing and lift the returns of the strong wool sector overall. Guy says the programme will build on the considerable success to date from the New Zealand Sheep Industry Transformation Project.

"PGP programmes must be aspirational and transformational in nature. They must look beyond business as usual which The New Zealand Merino Company has demonstrated with its leadership in the Merino industry and helping to establish the Te Hono Movement – a collaboration of primary sector leaders.

"Wool has lost its competitive edge as a fibre globally. We have the opportunity to make NZ strong wool and strong wool products relevant to select end users globally.

"The W3 PGP programme will be a key contributor to this and will set the stage for a sustainable wool industry well into the future."

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