Saturday, April 13, 2024

Velvet trade steady – but uncertainty looms

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Covid-19 has created huge economic damage, but it is not a bad space for New Zealand velvet producers to be in right now.
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Deer Industry NZ velvet marketing manager Rhys Griffiths says NZ deer velvet products are enjoying strong underlying consumer demand in a very uncertain world.

But it is not known how current opposing factors will influence prices to farmers in the 2020-21 season.

“Covid has caused huge economic damage and disruption across the globe but in major velvet markets consumers are looking for products that support immune function, one of the key attributes associated with velvet,” he said.

“It’s not a bad space to be in right now.”

Embassies in South Korea and China are reporting that NZ products with health attributes are doing well.

In Korea, despite covid disruptions, 20 new consumer products containing NZ velvet have been launched in the past six months.

“Just like in NZ, people in Korea avoided visiting their medical professionals at the peak of the pandemic for fear of picking up the virus,” he said.

“Patients are reported to be returning now, which will hopefully continue during the new velvet season.”

Rhys Griffiths | November 04, 2020 from GlobalHQ on Vimeo.

South Korean companies are further investing in consumer-friendly velvet products and in Taiwan the first branded consumer-friendly velvet-based product has been launched by South Korea-based KGC, a major NZ velvet customer.

But Griffiths says on the other side of the ledger, business confidence is an issue.

“Businesses have suffered in the pandemic, their working capital has been eroded, so they might be more cautious than ever about taking forward positions,” he said.

Buyers should, however, be reassured by the fact there is no evidence yet that production in NZ is getting ahead of market demand.

“We estimated last year’s production would be about 850 tonnes and it looks like it might fall just short of that, much less than some market pessimists were predicting,” he said.

While deer farmers would like certainty of what all this means in terms of farm gate prices, Griffiths says it is a question he is not able to answer.

“Certainty is not something I can offer,” he said.

“Because of covid-19, this is a unique season and prices will be what buyers and sellers agree on.”

DINZ is working closely in major markets with NZ Trade and Enterprise (NZTE) staff who will be visiting major velvet customers on the industry’s behalf.

“NZTE staff, particularly in Korea, China and Taiwan, have been very supportive of our industry,” he said.

“This connection is hugely helpful in a world where exporters cannot travel, Griffiths said.

Despite covid-19, DINZ is maintaining its long-term market development strategies designed to create new demand, especially for branded health food products, with China a major focus.

Griffiths says health food companies regard product quality assurance and traceability as critically important so DINZ is developing VelTrack, a sophisticated web-based traceability system that producers in competing countries will likely be unable to match.

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