Monday, February 26, 2024

Norwegian firm on lookout for long Merino

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Premium offered for quality wool in 100mm range.
Penny Murray and husband Martin Murray, second from right, check the quality of their premium contracted wool with Devold executives Tor Jonsson, Knut Flakk and, far right, Devold Wool Direct NZ general manager Craig Smith.
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Wool clothing company Devold of Norway is offering New Zealand farmers a premium contract for longer Merino wool.

This comes amid concerns about Merino bloodlines coming into NZ based on estimated breeding values for fats and eye muscle, focused on the meat factor rather than quality wool.

“We are losing the focus on the quality of wool,” NZ-based general manager of buying arm Devold Wool Direct, Craig Smith, said.

Devold owner and company general manager Knut Flakk and the general manager of the mill based in Lithuania, Tor Jonsson, were in NZ last month visiting growers and offering a premium to specific wool breeders.      

Devold has 38 contracted growers from Marlborough to Central Otago and into the Mackenzie region. All are eligible for the premium, but just 17 are currently sheep-to-shop growers.

Devold recently opened its flagship NZ store in Wānaka, operating under a vertical model where every step of the process from the wool to the yarn, to the final finished garment, is managed and controlled entirely by Devold. 

The model redefines how clothes are made from the ground up, but it needs top-quality, purpose-grown wool.

Under the new incentivised contract growers will receive a fixed price per kilogram, higher than the market average, with a bonus payment above the new contracted base rate for wool meeting the longer quality criteria.

Devold 18.7-micron wool is currently achieving  $24.00/kg clean, against the average market of $19.00/kg.

On top of the $24.00/kg, Devold growers selected for the new contract incentive are getting an additional $2/kg for longer length wool in the 95mm–105mm range.

“This is when growers are generally discounted $2/kg for long wool,” Smith said.

“Our contracts are already ahead of the market, in this case $5 ahead, and we are then rewarding through our contract structure growers who are growing longer wool, but still maintaining the quality to get the $2 premium, effectively better now by $7.”

The longer wool enables better processing and ultimately a better end fibre going into premium garments.

The five-year contracts are underway now and will be in place through to the 2026 season. 

“The contracts are offered to specific growers growing the style of wool we are after,” Smith said.

“We are very selective of the growers we are picking with the bottom line being it all comes down to quality.”  

Flakk said the premium for longer quality wool is aimed at encouraging breeders to prioritise breeding for wool over meat.

Devold has an aggressive growth strategy that means it needs the wool in greater volumes going forward, but it can only meet the demand with quality wool and quality wool suppliers.

“If it is not a win-win for both Devold and its partners then it will not work,” Flakk said.

“Partnerships must be transparent on both sides with clear and precise understanding in the contracts formed and reward accordingly.

“That’s the key to importance for us.”

Jonsson said everyone appreciates that costs are going up for everyone and it is important that this is recognised in partnerships.

“We know that. The gas price at the mill [in Lithuania] has gone up from €14 [about $23.80] a kilowatt to €270/kw so we know very well about costs going up but we must keep the quality so we have to keep paying,” Jonsson said.

The wool grown in NZ under the new contract structure is all destined for Devold garments globally.   

Maryburn Station farmers Martin and Penny Murray have been growing wool under contract for Devold for several years and this year are among the growers selected for the premium long-wool contract.

As growers they have developed a close partnership with Devold including having visited Devold in Norway and the mill in Lithuania.

“It’s about showing an interest in our business, and they have visited us,” Martin Murray said.

A self-confessed “wool man”, Murray said growing quality wool is his priority. “Any meat value is an added bonus.”   

Shearing 8000 Merino ewes, including hoggets, Maryburn Station this year produced 400 bales of wool with more than 80% of the clip supplied to Devold.

“The premium contract suits the micron of our sheep, it fits our basket, and the long term is good value, giving five years’ guaranteed certainty,” Murray said.

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