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$36 million Revolution for the NZ Sheep Industry

For immediate release
May 26th, 2010

The $36 million Revolution for the New Zealand Sheep Industry

The New Zealand Merino Company (NZM) and Government's Primary Growth Partnership (PGP) have announced a $36 million, 5 year initiative designed to amplify the momentum and economic returns already evident in New Zealand's fine wool sector, with substantial spillover for the benefit of the entire New Zealand sheep industry and the New Zealand economy.

NZM in collaboration with its supply chain partners will contribute $21 million to the initiative, with $15 million being funded by PGP.

With demand now starting to exceed supply on the back of partnerships in the active outdoors markets with companies such as New Zealand's own Icebreaker and USA Company SmartWool, NZM has resisted the temptation to move to offshore procurement, but rather will look to grow the supply base from this country. A number of new relationships in the luxury and superfine suiting markets provide further confidence to this initiative.

In an integrated programme involving science, technology and innovative global market solutions, not only will New Zealand wool be grown for specific end retail markets but the philosophy of market partnerships will extend into an array of other income streams for New Zealand's sheep farmers such as meat, lanolin and leather goods. Key to the initiative will be a focus on productivity gains and production shifts to assist in meeting the additional market demand generated. The details of which, are to be discussed during a series of grower meetings in mid June.

NZM Chairman John Nichol acknowledged the role of Government in establishing the PGP. “The process has been robust and at times demanding but it has forced us to further raise the bar in our thinking regarding sector innovation, integration and in particular value capture for farmers and the broader New Zealand economy”.

“In the nine months since we commenced the strategic work on the initiative we have been buoyed by the new opportunities that have already emerged as a result of the enthusiasm and genuine excitement from partners that have been part of our consultation process”.

Chief Executive John Brakenridge says it is NZM's stated goal to be a New Zealand primary sector exemplar. “The New Zealand primary industry has huge untapped potential. We have world class production science agencies such as AgResearch, we have highly professional farming producers, but the missing link for the broader New Zealand primary sector has been a sophisticated market interface”.

“New Zealand Merino growers have been proactive in recognising the need for innovation and change in their industry and the need for investment in marketing and differentiation of their unique product, but there is so much more that we can do”.

NZM says the PGP funding will allow it to not only ramp up its market innovation and production science work but to align all the parts of the primary sector investment, including greater synergies with other government agencies such as the Foundation for Research, Science and Technology, and New Zealand Trade and Enterprise.

NZM will also build on international networks such as that with Stanford University in the USA, with three leading students from the Stanford Graduate School of Business completing their international study at NZM.

“This is just one of a number of relationships that NZM is building with Stanford to ensure we are at the forefront of international marketing, technology and design thinking.” says Mr. Brakenridge.

Mr. Brakenridge somewhat dryly refers to the new PGP partnership as the start of the ‘great New Zealand sheep revolution’, one that will once again have the sheep as a mainstay of our economy, but in a lot more market-driven manner than the earlier clichés.

“The New Zealand sheep industry is an icon that has been languishing in exile, overshadowed by our black and white friends. But watch this space!”


The New Zealand Merino Company (NZM)
The New Zealand Merino Company (NZM), previously Merino New Zealand, is an integrated sales, marketing and innovation company. Today NZM is responsible for the sale of approximately $105 million of fibre per annum virtually all of which is exported. This represents 80% of the New Zealand Merino clip and 50% of the New Zealand Mid-Micron clip by value.
NZM connects grower suppliers with the premium global brands that ultimately purchase their fibre. The aim was to lift New Zealand Merino fibre out of the commodity basket, identify and differentiate the fibre from its competitors and unashamedly target leaders in apparel market segments internationally.
Today, supported by NZM’s branding and marketing activities, approximately 51% of the volumes transacted by NZM per annum are through direct supply contracts. These contracts provide Merino growers with a level of price stability in addition to prices above historic average commodity prices. This helps to build sustainability and resilience into New Zealand Merino farming businesses and allows for confident on-farm investment and management.
For brand partners, including SmartWool and Ibex in the US, John Smedley, Sdwolle, Howies and Reda in Europe, Nikke in Japan and Icebreaker, Mokopuna and Designer Textiles in New Zealand these contracts provide fair and sustainable pricing, consistency of supply quantity and quality, fit-for-purpose processing consignments and a direct connection with their growers.
Primary Growth Partnership (PGP)
The Primary Growth Partnership is a government-industry initiative that will invest in significant programmes of research and innovation to boost the economic growth and sustainability of New Zealand’s primary, forestry and food sectors.
The scheme will focus on boosting productivity through ongoing investment in innovation and delivering long term economic growth and sustainability across the primary sectors, from producer to consumer.
Investments can cover the whole of the value chain, including education and skills development, research and development, product development, commercialisation, commercial development and technology transfer.
Industries included in the Primary Growth Partnership are:
• pastoral (including wool) and arable production;
• horticulture;
• seafood (including aquaculture);
• forestry and wood products; and
• food processing (including nutriceuticals and bioactives).

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