Wednesday, 19 June 2019 13:55

$2b pay off in fine wool shift – NZM

Written by  Pam Tipa
Tom Conneen. Tom Conneen.

Shifting half of New Zealand’s crossbred wool clip to higher value fine wool contracts could boost the economy by about $2 billion, says NZ Merino Company (NZM) chief executive John Brakenridge.

“Wool could give kiwifruit and wine a run for their money in terms of exports,” he says. 

VF Corporation, one of the world’s largest apparel, footwear and accessories companies, is incentivising NZ’s sheep industry to grow more fine wool.  

”Global demand for natural fibre and NZM owned ethical wool brand ZQ Merino is swinging the pendulum in wool’s favour,” says Brakenridge 

“We are connecting more and more wool growers with long term supply contracts and we are seeing supply being soaked up seasons in advance. 

“Today a crossbred wool fleece fetches approximately $3  clean/kg whereas a Smartwool 22 micron contract going forward for the next three-five years now has a base price of over $20 clean/kg. 

“If we can shift half of NZ’s crossbred wool clip into higher value fine wool contracts, the economic upside would be around $2 billion.” 

VF Corporation, which owns brands The North Face, Timberland, Smartwool and NZ founded Icebreaker, has developed the new incentives for farmers as part of its commitment to sustainable solutions.   

“Today we expect more of our products – in design, performance and environmental and social impact – and we believe VF has the responsibility and opportunity to lead by example,” says VF’s vice president of global procurement and material supply, Tom Conneen. 

VF Corporation’s partnership with NZM has also been an obvious choice with wool being a long term investment opportunity. 

“Ongoing investment in genetics, leading animal husbandry practices and adoption of new supply models will be required, and VF is committed to working alongside NZM, the shearing community, breeders and growers,” says Conneen. 

“We’re confident enough in the future of wool to incentivise production through long term contracts and provide support where we can.  

“VF is working hard to be the global leader in Merino wool supply and the preferred partner of growers.”

Fine wool sheep farming is today more profitable than dairy grazing and other sheep farming systems, as shown in analysis by both NZM and AbacusBio, says Brakenridge. This is seen in the long-term wool contracts offered to NZM growers, such as the industry first 10 year contract with Icebreaker, coupled with contracts for SILERE (NZM’s Merino meat brand jointly owned and operated by Alliance Group Ltd).

“The increased demand for, and the value of, contracts has exceeded our expectations. We’re on the crest of a wave and are doubling our investment in adoption of the right genetics and practices to ensure this demand can be supplied from NZ wool.”

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