Velvet co-op slams sales tactics

ProVelco’s general manager Ross Chambers says market discipline has “gone out the window” in the past two seasons in a marketing free-for-all that has dropped prices.

There’s been a resurgence of brokers and velvet is becoming “the great under-performer in New Zealand’s pastoral sector,” he maintains.

In market prices have been dropped to make sales and generate quick turnover, but in doing so millions of dollars have been “stripped” from deer farmers’ pockets.

“Selling deer velvet is no different than any other business. You need to develop good relationships with customers who want steady prices for a product that is delivered when they want it, in the form they want it, and true to description. Raking velvet into a heap and expecting customers to turn up and bid for it just does not work anymore – in reality it never did.”

Recent announcements by one broker for producers to expect velvet returns 10% lower than last year and published prices $15/kg lower than early season’s opening sales are a self-fulfilling prophecy, he says.

While ProVelco started the selling season with its production contracted with advance payments, undercutting is making it hard to keep customer loyalty.

“Already we have had to re-adjust our contracted prices for several sales downwards so that our customers are not burnt by new market levels. Our customers were happy to pay more but when their competitors and traders are being offered product well below them they are instantly disadvantaged. If we want to keep their custom we are forced to follow the trend.”

Models from other primary industries show what can be achieved by producers investing in volatile markets, he adds.

“When your country is the world’s dominant player, there is no excuse for this sort of behaviour. We know that New Zealand’s deer farmers expect their chosen venison exporter to work hard to build durable, quality business and to act responsibly when establishing price levels so why not take the same approach to marketing velvet?”

Chambers says it’s disappointing the New Zealand velvet industry is heading down the same failed path yet again.

“You cannot force our three months of production into markets with year-round consumption unless you manage the process. Either the sellers/farmers manage that process or traders do. If traders get back in control their primary motivation is to maximise their margins and the easiest way to do that is to pay the producer less.”

ProVelco is 100% owned by growers and has its own collection team, grading services and sales team selling direct to clients in China, Korea and Taiwan.

It aims to be New Zealand’s best exporter of deer velvet by providing a quality service to its shareholder suppliers with competitive returns while being honest, reliable and developing enduring relationships with clients.