For immediate release
23 September 2007

Velconz Beginning Operation

Wellington—PGG Wrightson and Velconz Holdings Limited (VHL) announced today that they have agreed terms to form a joint venture called Velconz Ltd which will jointly market New Zealand deer velvet. Velconz will be in operation at the beginning of the New Zealand velvet selling season at the end of October.

“A group of concerned velvet suppliers set out well over a year ago to work out how New Zealand velvet could be marketed better. New Zealand is the largest and best producer and processor of deer velvet in the World, and we want it to be the best marketer as well. The group quickly realised that PGG Wrightson was the ideal partner to help us succeed with our aspirations” said Ponty von Dadelszen, Chairman of the Working Group.

PGG Wrightson and the Working Group have agreed a plan which will give velvet suppliers the opportunity to move beyond the farm gate and be directly involved in how their velvet is marketed” said von Dadelszen.

“This has been a challenging process. Balancing the needs of a low cost entry for suppliers with the capitalisation requirements of a new entity designed to strategically add value to the product was not an easy task. The result has been a transition process to which will see suppliers owning 50% of a company with a short term goal of handling 70% of New Zealand’s velvet giving it the ability to strengthen and add value to our velvet industry. The transition process takes into account the value in PGG Wrightson’s existing pool system but is a clear indicator of their commitment to the velvet industry as an equal partner alongside the suppliers to Velconz.”

So in its first year of operation, suppliers using the channel will receive a share, either fully or partially paid, for each kilogram of velvet contributed. This will allow then to vote in elections to appoint directors to VHL who appoint the supplier directors of Velconz.

Initially no money is required from velvet suppliers. They receive a share in the organisation which markets their product and is commercially responsible for the development of the velvet industry, both now and in the future. Velvet suppliers’ contribution is their patronage and their commitment to take care of the industry’s future interests and well as current season’s financial returns.

In its first years of operation, parties anticipate that there will be little change to the logistics for both velvet suppliers and buyers. It is important that sales and business is not interrupted and existing commercial forces are allowed to continue.

Velconz Limited is a 50/50 joint venture with a five person board – two appointments by VHL, two by PGG Wrightson and an independent director. VHL is a three person board which appoints two directors to Velconz, receives reports on the performance of Velconz and acts as something akin to Fonterra’s Shareholders’ Council. Provisional VHL directors are Bill Taylor (Southland), I Scott (Waikato) and G Cochrane (Otago). They have appointed S Nattrass (South Canterbury) and K Neylon (Southland) to the Velconz Board.

“It will be the Velconz Board’s decision, but the Working group would be supportive of Velconz immediately beginning discussions with Velexco Co-operative Ltd with the view of working together given that many of their goals are similar although some of their strategies are different” stated Ponty von Dadelszen”. The group would also like engage with velvet processors to better understand how Velconz can assist in essentially bringing velvet processing back home to New Zealand from offshore interests. Eighty percent of velvet producers in a survey agreed that it is important to have a velvet processing industry in New Zealand, concluded von Dadelszen.

ENDS

Background

Velvet is the growing antler of the male deer. It is removed annually under strict industry systems to ensure to welfare of stag. The New Zealand velvet industry is the largest velvet producer in the World, producing some 500 tonnes of velvet worth approximately NZ$30 million in exports for New Zealand annually. The primary market for New Zealand velvet is the Republic of Korea where it is used as an ingredient in oriental medicine prescriptions in wellness tonics.