Wools of New Zealand signs major deal in China
Wools of New Zealand has signed a partnership agreement with a leading Chinese manufacturer as the company looks to further grow demand in China and globally.
The Natural Fibre Exchange (NFX) was first launched in New Zealand in 2018 by Wools of New Zealand and Charles River Associates International as a multiseller open trading platform.
Online trading events occur every fortnight, starting on Tuesdays at 2pm New Zealand time, during which products will be bid on over multiple rounds, continuing until a round sees no new bids after which the product is sold.
Wools of New Zealand chief executive John McWhirter says that given the current rising international market demand for strong wool exceeding supply, NFX should help unlock increased returns for wool growers.
"The NFX offers online access from anywhere in the world, creating a global marketplace that connects buyers and sellers for seamless international trading."
Apart from direct contracting, wool is primarily sold at open cry auctions. These have the downside that all bidders must have representatives and an auctioneer in a single physical location and, with wool being handled by middle men in between harvest and auction, prices may not accurately reflect current markets.
With its online access and dynamic currency updates, McWhirter says that not only will Natural Fibre Exchange make trading in wool easier, it would also make it more accurate in terms of market demand.
But first, the system had to be overhauled to fit its new task.
"We got the people who wrote the local dairy trade auction software to upgrade ours so we could trade globally. The platform now trades foreign exchange and also manages transport," says McWhirter.
"To make it work in the international market we also have people employed by Wools NZ in China, India, Turkey and Europe. We've had to put an international team on to manage international customers."
Although the international version of the platform does not launch until April, the software in the system has already been applied to the domestic version of the site for the last six months.
McWhirter says that NFX is designed to be user-friendly, scalable and equipped with unique features not found in other platforms, all aimed at fostering growth in the wool trade.
McWhirter believes this move will position New Zealand's wool industry as a leader in digital innovation by enhancing the efficiency and accessibility of the wool industry and setting a new standard for online trading.
"Going back over the years there had been an oversupply of strong wool in the NZ market, causing price deflation because no one had to bid hard. Over that time there have been a number of activities engaged by ourselves and others to stimulate the demand for strong wool, such as investment in wool carpeting.
"International customers are showing interest in the electronic platform because they need wool and that encourages the bidding for wool on the global basis.
"We expect the NFX platform to have a positive impact on the global wool trade, leading to better outcomes for growers and encouraging collaboration between growers, buyers, and processors."
Farmers interested in selling their wool directly to international markets are encouraged to contact Wools of New Zealand. The international platform will officially be launched in April, but the site can be visited at www.naturalfibreexchange.com.
