A plea from farmers for some certainty around strong wool production has prompted carpet-maker Bremworth to offer growers supply contracts.
Bremworth chief executive Greg Smith said providing farmers with certainty of income is critical to the future development of New Zealand strong wool.
Bremworth NZ buys about 3% of NZ farmers’ wool, making woollen carpets from yarn-spinning plants in Napier and Whanganui and a carpet-tufting factory in Auckland.
Smith has just returned from meeting with a Vancouver-based business partner that sells product on behalf of Bremworth in Canada and the United States.
“There is opportunity to do more, there is good potential with the markets largely dominated by cheap synthetics,” he said.
“We have got to make sure wool is sold for more, the days of selling cheap wool are gone.
“We have to appeal to consumers paying more for natural products of higher quality.
“The future is not in mass scale cheap wool.
“We need to differentiate and we need to get that story to the consumers who do now have an appetite for natural and quality over synthetics.”
Bremworth is looking to grow all its export markets, “especially Australia, where 50% of our sales go now and we expect, because of the popularity, we will more than double volume in the next decade”.
Having worked at Merino outdoor attire company Icebreaker, Smith was part of the business when 10-year contracts were offered to fine-wool suppliers.
It’s a similar deal Bremworth is offering to strong-wool suppliers who can meet the quality specifications and certifications such as those associated with the NZ Farm Assurance Programme (NZFAP).
Offers of 10-year supply contracts have gone out to a select number of farms, co-creating a woolgrowers club to get better returns for farmers, for Bremworth and ultimately the consumer, he said.
“Growers can take a 10-year contract giving more surety to the bank.
“They can show their kids, bring them back to the farm, inspiring interest for future generations to see an opportunity.
“We are long way off at the moment with strong wool, but this is a start.”
Smith said the contracts introduce a floor that will not drop below a certain value.
“It’s a contract for growers and value will grow as Bremworth grows.
“We recognise on-farm inflation at 16% is not sustainable. We have to try and help growers, that’s the purpose of contracts.
“We want it to be successful. We are spending an enormous amount of money.
“We hear wool is the choice of people who want the best and the sales pitch is to grow that number of people.
“Farmers are making enormous progress, they are breeding for it, they care for it more than anyone.
“Our aim is to have 50% of supply under contracts exporting predominately to Australia while realising potential growth in North America.”
The contracts are offered by Elco Direct, the company’s wool-buying arm.
While Bremworth is aligning with Wool Impact, it’s on a different platform.
“Wool Impact and various other brands are working quite well together but I don’t think in a sense that is seen by farmers.
“I understand their patience is running out but reality is it’s taken 20 years to get this bad, there’s no silver bullet.
“It’s a matter of brands, industry, growers working together, being really in tune with and in front of the consumer.”
Federated Farmers meat and wool chair Toby Williams welcomed the contracts.
“It’s a fantastic initiative. Bremworth is showing good strong leadership, protecting their business going forward and offering security for farmers.
“We have a got a shrinking industry that’s not going to get better.
“We are developing an amazing fibre, if we can’t produce at scale, we need to protect the resource, we are very close to a cottage industry now.
“Unless contracts come out of Wools of NZ and Wool Impact then there will be no point very soon in developing products or markets as we won’t have scale.
“Bremworth read the room, that’s smart business securing their supply into the future.
“It’s the best step forward for strong wool growers in years.”
Williams is gunning for fresh thinking in the industry’s greater leadership.
“The reason we got rid of the wool levy was to get rid of the old boys’ network.
“We are in that space again with Wool Impact, Wools NZ – the same people trying to fix the problem they helped to create.
“We are over hearing we are developing markets, it’s taking too long away, meantime we are losing sheep.
“For a strong wool grower we need to know it’s not going cost us to shear.
“The only way to get surety of supply is to offer farmers a contract,” Williams said.