Coming into a season where market analysts were predicting another year of stable prices, the break up of the joint venture which was the NZ Velvet Marketing company, is an unwelcome occurrence.
Industry participants and long term velvet producers bemoaned the historical instability of price and volume associated with this product, and further changes in marketing options could give traders opportunities to lower the price.
This product has just recovered from a period of unsustainable price levels and it will be hoped existing prices can be maintained with this new venture. The farmer owned marketing company Pro Velco has appeal for larger producers, but smaller farmers are attracted to earlier payouts to maintain cashflow in their operations, and PGGW may be the marketing arm for them.
In an Asian market where market price and volume of product held, are often deemed to be too commercially sensitive to publish, fresh market information is difficult to access, but this site will endeavour to source market data so farmers and traders can make informed business choices.
PGG Wrightson is rolling out direct sales options for velvet suppliers via contracts, private sales or tenders aimed at enhancing cash flow for deer farmers. The new options follow the recent unwinding of PGG Wrightson’s joint venture relationship with ProVelco Co-op and Tasman Velvet Processors.
George Gould, Managing Director of PGG Wrightson says the joint arrangement, which was entered into in 2009, had represented an attempt to consolidate three velvet selling entities into one farmer shared business. “The initiative, while well intentioned, has not been successful and we are now moving to rebuild our velvet market share. At the same time we appreciate that there is still room to act collaboratively with other NZ sellers to uphold price stability and protect the ‘New Zealand Inc’ brand and we will continue to seek opportunities in this regard.”
Tony Cochrane, PGG Wrightson national velvet manager says the company would offer suppliers a weekly schedule of sale dates with sales on a managed but free flowing way, versus the previous spread sales systems with instalments. “This will act as a ‘point in time’ when velvet is graded and processed for payment, thereby improving supplier cash flow while making velvet more accessible to buyers.”
Mr Cochrane says the 2011/12 season should pose little risk of price instability due to stable volumes in market, while supplied grades of Super A have increased heavily and new initiatives to cut shorter and maximise regrowth represented an option for suppliers.
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