Backers of a new company charged with changing the way strong wool is sold and marketed say premiums being offered to growers by two British carpet manufacturers are a glimpse of the future.
Wool Partners International (WPI) has negotiated the premium, 15% higher than current auction prices, and chief executive Iain Abercrombie said other deals offering procurement premiums were under negotiation.
The deal coincides with growers considering a proposal in which WPI will become a grower-owned co-operative, Wool Partners Co-operative (WPC), but which requires the support of suppliers of half the country's strong wool clip, about 65 million kg, to begin business.
Growers will have to subscribe to a minimum 65 million $1 shares, payable over five years.
It appears a close call whether that benchmark will be reached, and exporters and merchants are fighting a fierce rearguard action to convince farmers not to participate.
The deadline has already been extended once and is now December 17, although WPC will update media today on the offer to growers.
Mr Abercrombie said the premium being paid by two United Kingdom carpet makers was guaranteed to exceed the auction price by a set level, but actual returns to growers would be influenced by exchange rates.
The United Kingdom carpet makers will pay a $1.40 a kg premium for Laneve branded wool which meets quality specifications and will be made into new carpet lines.
He said the mills want a reliable supply of wool and realise they needed to offer a premium price to be sustainable to growers.
Mr Abercrombie said half of the $1.40 a kg premium would be used for point-of-sale marketing and promotion through the 100 retail outlets which would stock the new carpet range initially, and half would be returned to the wool suppliers.
Another 150 independent retailers have said they also want to sell the carpet range and contracts are expected to be completed next year.
Mr Abercrombie said the initial contract would be for 40 tonnes of wool to prepare stock for two global flooring fairs in January and initial sales, which were expected to grow in hand with demand.
He agreed the news was timely given the share raising, but WPI had been working on the deal since last January and it was signed off only a few weeks ago.
This deal follows recent contracts WPI has signed with UK trading house and textile flooring supplier Sethia Enterprises and Rodeo Collection by Stark, a United States company.
