Govt inks $22.1m deal with NZ Merino to boost strong wool returns

The Ministry for Primary Industries signed a seven-year $22.1 million contract with wool marketer The New Zealand Merino Company to improve returns from strong wool.

Government and industry will each contribute $11.05 million under the Primary Growth Partnership programme in an attempt to better connect growers with consumers, differentiate strong wool products from synthetics, develop new uses and users for strong wool, and ensure on-farm production practices meet consumer expectations of a premium product.

The wool partnership is part of the government's PGP programme to boost the value, productivity and profitability of the country's primary sector through investment between government and industry. A total of $746 million has so far been invested in 21 programmes and the strong wool deal is expected to deliver an extra $335 million to the nation's economy by 2025.

"The wool industry was once one of New Zealand's highest earners, with strong wool making up the majority of this but it has been in decline since the 1990s," said Primary Industries Minister Nathan Guy. "Wool has lost its competitive edge as a fibre globally."

The programme "aims to reverse this trend by delivering higher premiums for New Zealand's strong wool sector," he said.

NZ Merino, which markets wool on behalf of growers, is best known for securing supply arrangements for fine wool with well-known brands such as Icebreaker for high-value garments. It branched out into strong wool, commonly used for carpets, in 2014 when it secured a contract to manage the strong-wool clip of state-owned farmer Landcorp.

Strong wool makes up the majority of New Zealand's production. New Zealand's national wool clip has been declining as sheep numbers fall to the lowest level in more than 70 years as farmers chase higher returns by converting to dairy, or focus more on meat producing sheep breeds.

Last year, the value of New Zealand wool exports rose 8.2% to $814 million, making it the country's 14th largest commodity export.

(BusinessDesk)

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