For immediate release
May 26th, 2010
The $36 million Revolution for the New Zealand Sheep Industry
The New Zealand Merino Company (NZM) and Government's Primary Growth Partnership (PGP) have announced a $36 million, 5
year initiative designed to amplify the momentum and economic returns already evident in New Zealand's fine wool sector,
with substantial spillover for the benefit of the entire New Zealand sheep industry and the New Zealand economy.
NZM in collaboration with its supply chain partners will contribute $21 million to the initiative, with $15 million
being funded by PGP.
With demand now starting to exceed supply on the back of partnerships in the active outdoors markets with companies such
as New Zealand's own Icebreaker and USA Company SmartWool, NZM has resisted the temptation to move to offshore
procurement, but rather will look to grow the supply base from this country. A number of new relationships in the luxury
and superfine suiting markets provide further confidence to this initiative.
In an integrated programme involving science, technology and innovative global market solutions, not only will New
Zealand wool be grown for specific end retail markets but the philosophy of market partnerships will extend into an
array of other income streams for New Zealand's sheep farmers such as meat, lanolin and leather goods. Key to the
initiative will be a focus on productivity gains and production shifts to assist in meeting the additional market demand
generated. The details of which, are to be discussed during a series of grower meetings in mid June.
NZM Chairman John Nichol acknowledged the role of Government in establishing the PGP. “The process has been robust and
at times demanding but it has forced us to further raise the bar in our thinking regarding sector innovation,
integration and in particular value capture for farmers and the broader New Zealand economy”.
“In the nine months since we commenced the strategic work on the initiative we have been buoyed by the new opportunities
that have already emerged as a result of the enthusiasm and genuine excitement from partners that have been part of our
consultation process”.
Chief Executive John Brakenridge says it is NZM's stated goal to be a New Zealand primary sector exemplar. “The New
Zealand primary industry has huge untapped potential. We have world class production science agencies such as
AgResearch, we have highly professional farming producers, but the missing link for the broader New Zealand primary
sector has been a sophisticated market interface”.
“New Zealand Merino growers have been proactive in recognising the need for innovation and change in their industry and
the need for investment in marketing and differentiation of their unique product, but there is so much more that we can
do”.
NZM says the PGP funding will allow it to not only ramp up its market innovation and production science work but to
align all the parts of the primary sector investment, including greater synergies with other government agencies such as
the Foundation for Research, Science and Technology, and New Zealand Trade and Enterprise.
NZM will also build on international networks such as that with Stanford University in the USA, with three leading
students from the Stanford Graduate School of Business completing their international study at NZM.
“This is just one of a number of relationships that NZM is building with Stanford to ensure we are at the forefront of
international marketing, technology and design thinking.” says Mr. Brakenridge.
Mr. Brakenridge somewhat dryly refers to the new PGP partnership as the start of the ‘great New Zealand sheep
revolution’, one that will once again have the sheep as a mainstay of our economy, but in a lot more market-driven
manner than the earlier clichés.
“The New Zealand sheep industry is an icon that has been languishing in exile, overshadowed by our black and white
friends. But watch this space!”
ENDS
NOTES TO THE EDITOR
The New Zealand Merino Company (NZM)
The New Zealand Merino Company (NZM), previously Merino New Zealand, is an integrated sales, marketing and innovation
company. Today NZM is responsible for the sale of approximately $105 million of fibre per annum virtually all of which
is exported. This represents 80% of the New Zealand Merino clip and 50% of the New Zealand Mid-Micron clip by value.
NZM connects grower suppliers with the premium global brands that ultimately purchase their fibre. The aim was to lift
New Zealand Merino fibre out of the commodity basket, identify and differentiate the fibre from its competitors and
unashamedly target leaders in apparel market segments internationally.
Today, supported by NZM’s branding and marketing activities, approximately 51% of the volumes transacted by NZM per
annum are through direct supply contracts. These contracts provide Merino growers with a level of price stability in
addition to prices above historic average commodity prices. This helps to build sustainability and resilience into New
Zealand Merino farming businesses and allows for confident on-farm investment and management.
For brand partners, including SmartWool and Ibex in the US, John Smedley, Sdwolle, Howies and Reda in Europe, Nikke in
Japan and Icebreaker, Mokopuna and Designer Textiles in New Zealand these contracts provide fair and sustainable
pricing, consistency of supply quantity and quality, fit-for-purpose processing consignments and a direct connection
with their growers.
Primary Growth Partnership (PGP)
The Primary Growth Partnership is a government-industry initiative that will invest in significant programmes of
research and innovation to boost the economic growth and sustainability of New Zealand’s primary, forestry and food
sectors.
The scheme will focus on boosting productivity through ongoing investment in innovation and delivering long term
economic growth and sustainability across the primary sectors, from producer to consumer.
Investments can cover the whole of the value chain, including education and skills development, research and
development, product development, commercialisation, commercial development and technology transfer.
Industries included in the Primary Growth Partnership are:
• pastoral (including wool) and arable production;
• horticulture;
• seafood (including aquaculture);
• forestry and wood products; and
• food processing (including nutriceuticals and bioactives).