Elders deal 'just what we were waiting for'
Elders deal 'just what we were waiting for'
Wool farmers are cautiously optimistic about the recent Elders Primary Wool announcement of an international supply deal that they hope will pull the market out of the doldrums.
Crossbred grower Peter Chamberlain, from Canterbury, says he had heard rumours that Elders was planning something and was pleased to hear that a deal had been struck with CCA Global Partners.
"When I first heard about the partnership I have to admit to thinking here we go again. But as I digested it all, I've become more convinced that there is more to this than just talk," says Chamberlain. "After all Elders wouldn't have made a public announcement if they didn't have something concrete - as a commercial entity they've got to think about their reputation. "
Chamberlain was impressed the deal was with the world's largest carpet retailer.
"We all know that wool is a niche product that people pay a premium for. The problem is that the returns have not been trickling back through to the producers. The great thing about this deal is the commitment at the retail end to help sell the story. Starting at that (retail) end and working backwards through the supply chain seems to be the logical way to do this."
David Donald from Wairarapa agrees. "Look at Merino - they've done a good marketing job, targeted their markets and then followed through."
Chamberlain is very keen to know more. "I want to know just how big the US market is. I've had a quick look at the export figures for last year and the volumes were pretty small - but I suppose it could all be going via China."
According to Elders' analysis, a great deal of the carpets and rugs made in China (and India) does end up on US floors. The analysis also shows that the US consumes 52% of worldwide carpet manufacture (of all fibre types).
Stuart Chapman also points out that the so-called 'high end' of US consumption represents over 300 million square metres, which if it was all made of wool would consume the entire New Zealand wool clip at least four times.
Cross Strath-Taieri farmer Stu Stevenson says he has had his fingers crossed since the announcement and is waiting to hear more information about the deal.
"I've got wool sitting in the shed and I'd love to be a part of it - if it's the real deal. The proof will be in the pudding but it's given us all some hope, which we desperately needed," says Stevenson. "I've been with Elders for a couple of years now and they certainly have the experience across all areas of the industry to pull this off."
All the growers were keen to hear the volumes, quality and price details.
Stuart Chapman Managing Director of Elders says that those details are being worked through now. In the meantime, he says that the best thing farmers can do to support Elders is to get their wool out of their sheds and into Elders Primary Wool's stores.
"It takes a long time to get new products into retail stores. We can't guarantee the amount of the premium yet, or which wool types we will need. We anticipate being able to enter into forward supply contracts within the next few months. That means the bulk of wool that will achieve better prices will be next season's clip. Of course, existing Elders customers and Primary Wool Co-op members will be best placed to benefit from an increase in prices. "
David Donald raised his concerns about the drop in quality of wool. He says it's been disappointing to see so many farmers viewing wool only as a by-product. He hopes that this deal will see farmers placing greater emphasis to ensure that the clip quality improves across the country. However, Peter Chamberlain feels that there will be no argument from farmers about supplying quality if they are rewarded in price - "We'll all just get on with it."
And what about Wool Partners International?
"There will certainly be some criticism about Elders not working with WPI. However we've been down the track of trying to get everyone all in together before and this has always hit industry road-blocks - it doesn't have to be that way," says Chamberlain. "We've all been waiting for an announcement from WPI but it hasn't come yet - and this Elders deal looks like it is just what we were waiting for and could drag the rest of the market up by default."