What is required to make the deer-velvet industry profitable and to keep it that way? That was the question put to Marlborough deer farmers at a meeting in Blenheim last week. PGG Wrightson and Tasman Velvet Processors (TVP) are proposing merging their velvet-marketing businesses under the New Zealand Velvet Marketing (NZVM) banner. Ownership is to be 25 per cent PGG Wrightson and 25 per cent TVP with remaining shares shared between two farmer co-operatives: the 20-year-old Velexeco and a new player, Velvet Suppliers.
"The idea is to consolidate a slightly broken industry," PGG Wrightson national velvet manager Tony Cochrane told an audience of six deer farmers and Blenheim PGG Wrightson staff. Between them, the farmers present grew about 75 per cent of Marlborough's 2.3-tonne velvet crop, farmer Michael Holmes of Mount Riley later told The Marlborough Express.
"Velvet growers already love their deer and love their velvet," said Ross Chambers, of the NZVM sales team. "We feel they can now become more connected to the market, which should give them more confidence about the way their excellent product is sold." For the farming of velvet to be profitable, velvet prices must average $90-$120/kilogram, said Mr Chambers. That might be achievable this season due to shortage of supply, with early indications that production could be down about 40 per cent on last year to around 340-350 tonnes.
To hold these prices long-term was the challenge and would require removing volatility from the industry. The average price over 19 seasons had been $81.50/kg. Because velvet was valued as a blood warmer in the major markets of China, Korea and Taiwan, demand peaked in early winter during the southern hemisphere harvest. This meant processors and distributors had to hold the product for close to a year at great financial risk. "To get a higher price we need to help them to manage their cashflow requirements,"said Mr Chambers.
Velvet producers at the meeting seemed generally positive about the NZVM proposal, but saw the catch as being the requirement for capital. Some expressed disappointment that the per kilogram payment they would need to make for shares in the farmer co-operatives involved was not yet available. Br/>
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