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Velvet co-op achieves good result

Velvet co-op achieves good result

Velexco, the velvet marketing co-operative, says its prices to suppliers last season were significantly ahead of the industry benchmark.

On average Velexco’s prices for the 2006-07 selling season were 13.3% ahead of the PGG-Wrightson pool average pool price for all grades and 17.8% ahead of the pool averages for the Super, A, B and C grades which make up most of the New Zealand velvet crop.

General manager Ross Chambers said the co-operative had worked hard to provide a quality product and a service that had value to its buyers.

“While the pool averages are the benchmark, and we have been 10% ahead or better for the past three seasons, Velexco is more involved in the marketplace than a straight auction system like the pools. Our shareholders deserve a return that reflects that extra effort.”

Mr Chambers said velvet prices are very volatile, both within and between seasons and it is a cornerstone of Velexco’s marketing philosophy to remove a lot of the risk farmers and buyers face when they sell and buy on the spot market.

“We do this by providing buyers with good velvet over a much longer period than the traditional 10 week velvet selling season. For their part, farmers are paid as their velvet is sold,” he said.

“By price averaging during the season, all suppliers receive the same price for the same grade, regardless of when individual parcels of velvet are sold.”

Mr Chambers said this orderly selling system created a better marketing platform, but meant farmers had to wait longer for their money.

“Most of our suppliers are happy with payment by instalment because they know they are getting better prices overall. They also recognise the importance of providing buyers with year-round supply. But the reality is that many farmers need cash flow in the spring and summer when velvet is harvested,” he said.

“To reflect this – and to reach more farmers – we have broadened our selling options for the current season.

“Shareholders can now put all or some of their velvet in an amalgamated tender and when we have contracts for the supply of a specific grade or quantity of velvet, we will also be providing an on-farm selling option.”

Velexco markets around 10 -12 per cent of NZ velvet production and aims to become even more influential in the way New Zealand deer velvet is sold. To this end it is actively seeking to increase its supply base. Mr Chambers said it is the only New Zealand operator with year-round representation in the Korean market.


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