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Direct-to-Scour (D2S) ‘growing at a rate of knots’

10 April 2014

D2S ‘growing at a rate of knots’

Wool growers have rallied behind Wools of New Zealand's Direct-to-Scour (D2S) spot market sales option.

Launched in October last year, volumes under D2S are doubling month on month and have now reached around 350,000 kgs, with annualised volumes expected to reach between 3.5m – 4m kilograms within its first year, about 8% of the market.

Ross Townshend, Chief Executive of Wools of New Zealand told shareholder growers and supporters during the company’s roadshow series of 12 national meetings this week that the system was “simpler and put more money into the pockets of growers than the conventional model. It makes logical sense for growers’ wool to go to the first point of processing which is the scour where it can be core-sampled, independently tested, objectively assessed and fairly priced.

“Up front there is an immediate saving of at least 13c/kg. The price is based on objective assessment of growers’ wool and reflects the prevailing market rate. It is also the growers’ decision whether to accept the price offered or to keep their wool in the system and hope for a price lift in future,” said Townshend. “The pricing acceptance remains totally in the growers’ hands.”

He added that the actual volumes that have come in have grown more rapidly than expected and there is still some work to do on “user-friendliness”, but the process is generally working very well with many repeat customers and the vast majority of our growers accepting the prices offered. WNZ will continue to keep an eye on prices to ensure that they are fair and reasonable and transparent.”

WNZ continues to promote its new contracts, including a lamb’s wool contract with UK upholstery weaver Camira, offering growers pricing in a range of $6.25/kg clean for 0.0% vegetable matter (VM). “Obviously first prize for our shareholder growers is to lock into a supply contract but the D2S spot market option is there for wool that cannot meet the tight contract specifications set by WNZ’s customers.”

ENDS

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