Tuesday, March 5, 2024

Govt’s wool pledge could shift market

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The government owns so many buildings, its pledge to use wool in them where feasible could kickstart a recovery in strong-wool prices, says Bremworth CEO.
Bremworth chief executive Greg Smith says changes to the company’s supply chain will allow it to enter the high-volume commercial export market.
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Bremworth’s chief executive hopes the government’s pledge to use natural fibres in its buildings will kickstart a price recovery for strong wool.

Greg Smith told the Farmers Weekly In Focus podcast that the sheer number of buildings the government owns would help increase demand for wool.

“The government owns a lot of buildings, they build a lot of buildings and are in the process of renovating and refurbishing a lot of homes, and the use of those fibres in carpets, woollen fibres in insulation and underlay – that’s an incredible opportunity to soak up an enormous amount of New Zealand wool. 

“And from my perspective, that in turn will mean there is less wool available internationally and it should be providing a wool price increase for farmers, which would be really greatly welcomed.”

Listen to “Feature | Bremworth welcomes government’s wool pledge” on Spreaker.

Despite a year of subdued markets and extreme weather, Bremworth booked a FY23 net profit after tax of $10.7 million – bolstered by a $35.5m insurance payout related to its flood-hit Napier spinning plant.

“I’m really proud of the team, all things considered,” Smith said.

“With the cyclone, a bit of a downturn in economic conditions, inflation rates and the cost of living – to present the result we did … I think it bodes well for the future. 

“Once we’ve got our supply chain back up and running, hopefully we can start to provide some growth and some better returns for our shareholders.”

There’s been a lot of talk about a return to prominence for natural fibres as people eschew synthetics. Smith said he’s seeing signs of that talk turning into sales.

“I think it’s definitely a reality in Australasia, and we’ve seen a higher level of uptake as well in New Zealand.

“However, when you look at America, for example, it’s such a price-dominated synthetic market. But that’s starting to open up a big opportunity for our brand in that market at a premium price point for people who are wanting luxury and a natural product. That’s really exciting. 

“People are sort of raging against plastic in lots of different ways and particularly petrochemicals as a whole. And so with that in mind, the future of wool is actually becoming brighter than it was a while ago.”

There have been quality issues highlighted here by some in the wool industry, though, and Smith said that was understandable as farmers are essentially doing it for love and not money right now.

“We’ve introduced a 10-year contract for strong wool, the first in the strong-wool industry. We want to give them that confidence that if they can meet these qualities, then we’ll pay over the price that they’re used to getting so that we can shore up our supply and manage our margins over the longer term. 

“And they can have confidence in investing and maybe that extra rousey in the woolshed or some extra time taken or some genetics work being done to ensure that we’re getting more of that type of wool through.”

Smith said farmers want to be part of strong wool’s brand story but it’s up to Bremworth to prove that time and investment is worth it.

“Then everyone feels like they’re part of something bigger than just sending it off to an auction and getting what they can.

“Farmers are desperate to be part of that story and it gives them an enormous amount of pride.”

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