Friday, July 8, 2022

ProVelco fills contract

OFF TO KOREA: South Canterbury farmer Graham Peck with velvet for ProVelco’ Korean contract. Photo: Stu Jackson Deer farmers looking for stability in their industry have backed a first ever forward contract deal for New Zealand velvet.

Farmer owner co-operative ProVelco has been up and down the country over recent weeks meeting with farmers to promote a velvet contract that will set the benchmark for future stability in the industry.

Deer farmers have been offered a fixed price for their velvet after ProVelco signed an ongoing supply agreement with one of South Korea’s leading health food companies, Korea Ginseng Corporation (KGC).

The co-operative committed to the KGC contract at $100/kg for key velvet grades, a price significantly above the current average, and farmers have in turn committed to ProVelco.

ProVelco general manager Ross Chambers confirmed the contract volume had been met, although the co-operative had hoped to bring more farmers on board.

“But at this early stage we do have enough of the right velvet signed up. This is very good business and we have something solid to work with going forward,” Chambers said.

South Canterbury farmer Graham Peck has signed up and is expecting his first consignment of velvet will be with ProVelco in the next two weeks.

Peck and his wife Sharon moved to NZ in 2004, leaving their cropping farm in the UK for a deer, sheep and beef property at Pleasant Point.

They were very keen to “give deer a go” but we weren’t quite so brave as to go totally deer. So the couple sold off the hinds and opted to buy in two-year-old stags for their velveting venture. They also run beef cattle and 1800 ewes.

“We wanted to concentrate just on the velvet and we have been happy with the results we have been getting and the progress we are making,” Peck said.

But in Peck’s view, the industry amalgamation to form a single velvet marketing alliance had not necessarily been a good move for marketing, nor for stability going forward. He welcomed choice.

“We were keen to down the co-op way. We were very disappointed with the amalgamation. That’s why we have moved to ProVelco. We like the concept and we like what is being offered. We have signed up to this new contract and that means up front as a producer we can move product straight away, it is a good deal.”

Peck was particularly impressed with KGC’s interest to be involved back to the producer. “We very much like the idea of being involved in marketing to somebody who appreciates what NZ is doing and the hard work we put in as a producer.”

With velvet having experienced significant ups and downs over the years, Peck is hopeful the new agreement with KGC will bring some certainty in the future.

“We are taking a gamble but it does put a bottom line in the market and we hope that will lead to better prices in the future.”

The deal is being hailed by its promoters as a “breakthrough” with the potential to lift returns for farmers and encourage further investment. ProVelco would continue to promote the contract to farmers as, despite the initial sign up time having expired, there was still opportunity to take on more farmers, Chambers said.

The velvet will be dried in NZ. Farmers are paid a deposit on signing up, a further payment immediately after their velvet is graded and the balance once it is delivered to KGC.

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