Velvet prices favour the patient and the firm

Velexco Co-Operative Group Media release 6 November 2008

Velvet prices favour the patient and the firm

Farmers are advised to be patient and disciplined when negotiating sale prices for their deer antler velvet.

"Farmers accepting $55-60 a kilo from road buyers are doing themselves, other deer farmers and overseas customers, no favours at all," says Velexco Co-operative Group general manager Ross Chambers.

"Current market prices are 20-30 per cent above that level. But they will be sustained only if the product is released gradually onto the market by strong sellers."

He says forward buying power has waned in recent years and, with the global credit crunch, has now gone from the spot velvet market entirely. Farmers, he says, need to adapt to this new reality and be stronger sellers.

"Until five years ago, farmers could sell large volumes of velvet following harvest for reasonable prices without any problems. That was because Korean buyers could readily access finance to buy the crop and carry it in stock until it was needed by their customers.

"Those days are well and truly over. We are now seeing committed players in the industry being undercut by farmers accepting speculative bids from weak buyers at the start of the season. As we saw last year, this can be hugely destabilising."

Mr Chambers says the velvet market is not immune to world economic events and foreign exchange rates remain unstable.

"However, New Zealand production is expected to decline from 470 tonnes last season to 420 tonnes this season and this has been noted by buyers. Velexco is also hearing anecdotal reports from China that velveting herds there are being slaughtered because of dramatic increases in feed costs," he says.

"For these reasons, farmers should be looking for better prices this season than last. But they will only achieve them if they sell their velvet through someone who is willing to phase the release of the product onto the market over several months.

"This suits genuine processors who buy a batch, process it, sell it and then come back for more. Above all, these people want quality assured product at a stable price. If they buy at $85 a kilo, then the price drops to $65 a kilo, they spend a whole season recouping their losses.

"Firm pricing, selling small quantities often, is in everyone's interest."

ENDS