Friday, July 8, 2022

Korean deal boosts velvet industry

A new initiative for the New Zealand velvet industry has proved successful in its first season, with demand for higher volumes prompting a call for increased support from producers.

ProVelco’s inaugural contract with international health food manufacturer Korea Ginseng Corporation (KGC) has provided NZ deer velvet farmers with price stability and the co-operative is urging shareholders to support its plans with KGC.

The co-operative’s annual meeting on May 18 will give shareholders the opportunity to hear first-hand the plans ProVelco has to expand its relationship with KGC.

Shareholders needed to get behind the 100% farmer-owned co-operative’s vision of producers working together to achieve greater market share and returns, chairman Graeme Sutton said.

With the season’s contract almost complete, Sutton said it had gone well and KGC wanted to buy larger volumes of velvet next year and beyond.

“This is extremely positive but it puts pressure on the co-operative. ProVelco is having a good year but we need increased shareholder support to maintain this growing relationship. The AGM is an opportunity for our shareholders to learn more about KGC, discuss progress and ask questions,” Sutton said. 

This season’s supply agreement signed with KGC was a NZ first for the velvet industry and Sutton hoped shareholders understood its significance. 

“ProVelco was the first NZ velvet supplier to lock in a price for producers months in advance via KGC, which was a significant milestone for the industry,” he said.

“Market stability doesn’t just happen. The velvet market remains sensitive to volume, which emphasises the importance of ProVelco’s approach to securing long-term contracts with established health-food manufacturers like KGC.”

NZ velvet producers needed to learn from the experience of other primary producers and band together to achieve greater returns, he said.

“The market will dictate the price but as sellers we need to be co-ordinated to ensure the boom-bust cycles that have afflicted the velvet industry in recent years remain in the history books.”

Market expertise was crucial to success and working with KGC had provided the industry with a new business model that would deliver long-term sustainability for the industry, he said.

While the KGC contract was its most high-profile contract, the co-operative was also actively working to develop more business for dried velvet in other market sectors, he said.

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