The velvet industry has followed the blueprint of the dairy and wool industries and created an entity with scale and, it hopes, market influence.
Two marketing and two procurement companies announced yesterday they had merged to form the New Zealand Velvet Marketing Company (NZVM) in a move it was hoped would create an entity with enough size and influence to increase demand and returns for farmers.
NZVM chairman Bill Thomas said in an interview the new company would handle about 200 tonnes of velvet, about half New Zealand's production, but it hoped to attract new suppliers.
The company's size should allow it to work closer with importers and distributors in Korea, China and Taiwan to raise demand and send price signals back to farmers.
The new company was the result of PGG Wrightson, Tasman Velvet Processors, NZ Velvet Co-operative and Velexco Co-operative Group each taking a 25% stake in NZVM.
In the year to the end of 2007, velvet exports were worth about $39 million. However, returns to farmers have fluctuated wildly, last year averaging about $75 to $80 a kg.
Mr Thomas said some studies had shown prices to farmers needed to be more than $100 a kg to be sustainable, but the price had only been over $90 a kg three times in the past nine years.
With China looming as large a customer as Korea, Mr Thomas said the new structure should allow velvet to be marketed, something that had not been possible in the past.
Velexco chairman and deer farming pioneer James Guild said that, for once, velvet growers might finally be able to exert influence beyond the farm gate.
"For the first time in 35 years, velvet producers will have an equity interest in a marketing structure dedicated to selling the vast majority of New Zealand's crop."
NZVM was following a similar structure to Fonterra in the dairy industry and the New Zealand Merino Company, which have concentrated procurement and marketing in large farmer-controlled entities.
