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17 May 2010
Woolgrower company marks ten years
Celebrating its first ten years, a farmer owned company, created to improve returns by bringing woolgrowers closer to their customers, has brought around 400 farmers on board, supplying wool with an export value of some $10 million per annum.
Recognising this success, others in the wool industry are taking the same approach.
In the late 1990s, Mid Canterbury farmer Tim Wilkinson’s increasing frustration at the inability of the wool industry to focus on the end users of its product, and the consequent reduction in returns for his wool, motivated him, and others to take matters into their own hands.
Ten years later the philosophies they put into practice, and have honed since, have won the approval of farmers and are now beginning to gain wider acceptance, with others in the sector adopting them as the way to turn around an industry that has been in the doldrums for at least a generation.
Along with a handful of like-minded woolgrowers, in 2000 Tim Wilkinson formed a company to give farmers critical mass when selling their wool, while ensuring their raw product could meet the growing sophistication of its market.
“From the McKinsey Report, commissioned in 1999, it became clear that growers of strong wool should take action on their own behalf.
“We needed to differentiate our product and we needed to maximise commercial benefit back inside the farm gate. To achieve that, we recognised that farmers had to act collectively and establish more direct links with the manufacturers who process our wool.
“Merino growers and their customers had developed a similar model.
“A number of us were involved in a nationwide campaign to create an integrated business for strong wool from the farm gate to the end user. When that did not come to fruition, we decided to go it alone on a smaller scale,” he said.
Forming a company, Canterbury Romney, they contracted farmers to aggregate their clip and consign their wool direct to processors, rather than selling through brokers or at auction.
“Initially Canterbury Romney supplied to Feltex in the North Island. While this wool was type specific and attracted good premiums, we could not take all the wool from a grower’s shed. It made better business sense to process our wool in the South Island, offering our growers the chance to market their entire clip. For that reason we established a partnership with New Zealand Wool Services International Ltd (WSI), supplying to their scour at Kaputone, just north of Christchurch.
“That relationship has remained ever since, going from strength to strength, growing beyond Canterbury to the wider South Island, contracting over 400 farmers, and becoming the prototype for WSI’s Purelana direct supply initiative,” he said.
WSI marketing manager Malcolm Ching has worked alongside Canterbury Romney to develop the partnership since Tim Wilkinson first approached him. He says the merino example is frequently cited as the model for New Zealand’s coarse woolgrowers, but it has proved more difficult to apply for fibre destined for carpet production.
“Carpet is a long-term investment, whereas the design or fashion garments created from merino fibre raw product are relatively short-term purchase decisions. Respective manufacturers of fashion apparel and carpets are influenced by different trend cycles and work to very different time frames. Influencing the latter to change their manufacturing practices is a much longer process than has been the case for merino with the fashion industry.
“To overcome that, we must generate better recognition of wool as a special, superior and environmentally sustainable fibre, which is why we developed Purelana as a branded product providing manufacturers whose focus is on quality with assurance of a premium standard, traceability and a consequential marketing advantage.
“Delivering all of this to our customers requires guaranteed supply. Canterbury Romney provides that, and three years ago we began applying the procurement model we have developed with them over the past decade to our Purelana brand. It has been interesting to see other scoured wool brands that have been introduced elsewhere since then have emphasised similar qualities in their marketing,” he said.
Milton Hulme, managing director of Woolrite, acts on behalf of Canterbury Romney and WSI, dealing day to day with the farmers who consign their wool via the partnership. He says the arrangement has stood the test of time.
“Farmers are loyal when they know and trust a system. Canterbury Romney’s principles are keeping it simple and direct, cutting administration costs to ensure growers maximise revenue. When they understand that and see it working, farmers have been supportive. Achieving a favourable price is important as well, of course, but if the price wasn’t right, Canterbury Romney would never have made it off the ground,” he said.
Tim Wilkinson says it is ironic that it has taken the rest of the wool industry so long to move in a positive direction around procurement systems and marketing initiatives.
“Ideally, back in 2000, when the McKinsey Report was published, differences within the industry would have been set aside and everyone could have focused on the job of restructuring systems that were not working in our best interests. Unfortunately, the decisive leadership and effective strategies needed to make that happen were lacking and the marketing of New Zealand’s strong wool has continued to languish as a consequence.
“Recent talk of a concerted effort to create demand for wool is certainly helpful. That will only be possible if appropriate procurement systems are in place, with widespread grower support. What Canterbury Romney and WSI have done, through the Purelana brand, demonstrates that it is possible to develop efficient systems that can serve the best interests of growers at the supply end, while creating a story that appeals to the end users of wool.
“Seeing others take a similar path is gratifying, though industry restructuring to create a more cohesive and functional wool sector is really what is required above and beyond this improved marketing and customer focus,” he said.
WSI exports around 40 per cent of New Zealand’s coarse wool clip to around 30 countries and owns two of the country’s five operational wool scours, at Kaputone north of Christchurch and Whakatu in Hawkes Bay.
Further Information:
Tim Wilkinson, Chairman, Canterbury Romney – 027 203 6791 or 03 303 7058
Malcolm Ching, Marketing Manager, NZ Wool Services – 021 330 392 or 03 357 8711
24 Feburary 2010
Leading wool exporter foresees improving trend despite reporting interim loss
Leading wool exporter NZ Wool Services International Limited (WSI) has reported a loss for the six months to the end of 2009, but is on track to turn that around in the second half of its financial year.
In the six months to 31 December 2009 WSI lost $680,173, compared to a profit of $1.036 million for the equivalent period in 2008.
Michael Dwyer, managing director of WSI, which exports around 40 per cent of New Zealand’s strong wool clip, puts the poor interim result down to the residual effects of the global economic downturn.
“While disappointing, the loss is less severe than was anticipated at the time of the company’s Annual General Meeting in December 2009, and we are already seeing considerable improvement in both trading and scouring activity, to the extent that by 31 January the company was back in profit.
“Prices for coarse crossbred wool have also lifted significantly, partly influenced by WSI’s strong participation in the market, providing further positive news for woolgrowers.
“Assuming the current high level of activity continues, we have reasonable confidence of reporting an acceptable profit by the end of our financial year,” he said.
According to Michael Dwyer, immediate signs are positive for New Zealand wool, but the sector must restructure sales and marketing activity to consolidate this.
“A solid recovery in prices for most wool types is emerging. An empty pipeline, reduced stocks, reduced production and improving demand are all working in favour of this.
“However, to sustain demand, coarse wool needs to be promoted more vigorously, emphasising its natural merits and its credentials as an environmentally sustainable product. Much, much more needs to be done to promote New Zealand coarse wool as a natural, healthy product that can breathe, is comfortable and is not derived from oil. Our Purelana brand would fit ideally within such a wider initiative, promoting New Zealand coarse wool.
“To ensure the profitability of wool production, achieve higher sustainable prices and return these to the grower, the industry must restructure sales and marketing activities. Currently numerous exporters all ply their matching wool types in the same markets, competing for the lowest price in an effort to exclude the competition. Clients involved in manufacturing take the opportunity to play one against the other. As we have seen recently, in a weak market this results in ridiculously low prices,” he said.
Michael Dwyer says WSI will work with any like-minded organisation to redress the serious shortcomings of the marketing and supply structure, and believes the company is the ideal model for the future of the New Zealand wool industry.
“We have the most efficient, cost effective means to supply wool to the consumer: direct from farm to WSI’s scours, to manufacturers; it is generally recognised that we have the best scours in the world; and we lead the New Zealand wool sector in marketing and distribution, accounting for more that 40 per cent of all coarse wool that is exported in the scoured state,” he said.
Further information:
Michael Dwyer
Managing director
NZ Wool Services International
03 357 8700
18 Feburary 2010
Environmental credentials could raise national wool cheque by at least $30 million, says leading exporter
‘Green’ consumers are good news for sheep farmers, says the country’s leading wool exporter, New Zealand Wool Services International Ltd (WSI), which this week had its scouring systems rated as sustainable by a strict European Union environmental watchdog.
Increasing international consumer demand for products that minimise impact on the environment should help revive the fortunes of New Zealand woolgrowers by at least $30 million per annum, according to WSI managing director Michael Dwyer.
“With wool only making up 1.7 per cent of all the world’s textiles, as consumer demand for sustainable products grows, wool that meets the criteria should create a supply-demand imbalance in its favour, which, logically, should increase wool prices across the board.
“Even if prices lift by only ten per cent as a consequence, this would add over $30 million to the national wool cheque,” he said.
To help accelerate that process and capture the benefits, WSI has achieved the European Ecolabel standard for its South Island scour, at Kaputone, north of Christchurch, says Michael Dwyer.
“Ecolabel reinforces the premium value of Purelana, our branded scoured carpet wool. Its environmental credentials will increasingly set it apart in the international market.
“Various countries are developing standards around the environmental impacts of manufacturing processes. With the European Union behind it, Ecolabel will carry weight in many of the markets for New Zealand wool, demonstrating to consumers it is processed with minimal environmental impact. Organic certification is slightly different, relating to how wool is produced on-farm and ensuring its organic status is maintained during processing.
“Wool is a natural product, with many outstanding characteristics that cannot be duplicated by synthetic fibres. The way we produce wool is kind on the environment. New Zealand woolgrowers need to ensure our international customers know that. WSI has achieved the international criteria, which provides us with a marketing advantage that has huge potential to increase the export value of wool scoured at our plants,” he said.
WSI exports around 40 per cent of New Zealand’s coarse wool clip.
Ecolabel is a consumer standard for a wide and expanding range of products and services, from cleaning fluids to appliances to lubricants to services such as tourist accommodation.
Michael Dwyer says achieving the Ecolabel standard is exacting.
“Ecolabel sets tough criteria. For wool there are stringent regulations over what is extracted when our product is scoured, and what is discharged back to the environment after the treatment of effluent.
“A few years ago we upgraded the effluent management system at the scour, developing an aerobic treatment process at Kaputone that significantly improves our capabilities. What we now have in place is practically a closed loop system, independent of civic wastewater treatment. While it was a considerable investment, it positions us ahead of demand for environmentally sustainable processing requirements.
“Because our scours use the most modern technology and must meet high environmental compliance standards under New Zealand’s resource consent system, our scour at Kaputone is the only plant in New Zealand that can comply with Ecolabel’s scoured wool criteria with its onsite effluent management system. We believe other scours elsewhere in the world will have great difficulty meeting these,” he said.
Meanwhile, as consumer awareness of environmental concerns increases, WSI is moving to prepare for growth in demand for organically produced wool.
“In New Zealand standards for certification of scoured wool as an organic textile are set by AsureQuality. These are based on the use of biodegradable detergent, elimination of any contaminants that would compromise the organic nature of the product, removing the potential for cross-contamination of the organic wool, and assurance that harmful residues are not discharged into waterways.
“As with the Ecolabel, our scouring systems at Kaputone meet those standards and have been approved to scour organically produced wool,” said Michael Dwyer.
WSI owns two of the country’s five operational wool scours, at Kaputone north of Christchurch and Whakatu in Hawkes Bay, marketing and exporting New Zealand wool to around 30 countries.
Further Information:
Michael Dwyer, John Dawson or Malcolm Ching
New Zealand Wool Services International
03 357 8700
3 March 2007
Purelana launched by WSI for Direct Wool Supply Contracts
New Zealand’s leading wool exporter and scourer, New Zealand Wool Services International Ltd (WSI) has launched a new exciting direct supply initiative which it hopes will result in better long term returns for growers.
WSI managing director, Michael Dwyer said the initiative would support the company’s Purelana brand. The Purelana brand which is a registered trade mark has been developed exclusively by WSI to provide superior New Zealand scoured wool product with a clear point of difference in export markets.
“Unlike other coarse wool supply contracts, both past and present, there are no hidden costs here. WSI is offering woolgrowers very generous premiums, in return for their commitment to supply WSI exclusively.
“ We consider this initiative a partnership with farmers, with the sole intention being to lift wool returns as a means of strengthening both farmers and our company’s investment in producing, processing and marketing branded New Zealand wool” he said.
With a three year exclusive supply contract, woolgrowers signed to Purelana will receive an annual forward market price, a premium pool payment and a loyalty rebate. The terms of the agreement are totally transparent, with no hidden costs. Farmers can thus accurately budget their net wool returns.
“This is a change for the better in the New Zealand wool industry” he said.
Implementing this initiative broadens the Purelana branding strategy and aims to ensure sustainable returns for woolgrowers and WSI. Guaranteed farmer commitment will underpin the Purelana brand, enabling WSI to strengthen its competitive position in the international market place, which they believe will assist prices to recover over a period. Growers will, of course, share in the increased returns.
Consumer markets and regulatory bodies worldwide are beginning to demand traceability and auditability, for a far wider range of product than ever before and a higher value is being placed on products that comply. The primary sector is being pressured into compliance. Wool is no exception.
“Traceability differentiates Purelana from other wool. Because we control and track our product at every stage of the production chain, through procurement, processing and marketing, every bale of Purelana wool can be traced and documented from its raw state to its final use. This enables customers of goods made from Purelana to verify the products origin. This is proving an important selling point to customers and retailers of our product.
“ This initiative was inspired from the desperate need to lift the woolgrower’s returns from wool. The low returns farmers have experienced for a number of years, has shifted their focus away from wool production and quality control. The only way to convince farmers to retain a quality clip is to lift their returns. Purelana is designed to take the first steps to achieving that” Dwyer said.
A commitment of long term supply on both sides will give consistency in timing, quantity and quality, which are important for processing and marketing.
WSI is developing this concept with several major woolgrowers and aim’s to make this trading option more widely available in the future, once proven.
All wool procured by WSI through its Purelana direct supply initiative will be processed at one or other of the company’s two state of the art scours – at Kaputone north of Christchurch and Whakatu in Hawkes Bay.
WSI currently markets a major percentage of New Zealand’s coarse wool clip to clients in over 30 countries.
Further Information:
Michael Dwyer Malcolm Ching
Managing Director Manager – Purelana Initiative
(03) 357 8700 (03) 357 8700
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