Buyer big supporter of wool industry

Mohit Kumar Rathi (centre), of Indian company Rathi Woollens, learns the intricacies of shearing...
Mohit Kumar Rathi (centre), of Indian company Rathi Woollens, learns the intricacies of shearing with Simon and Annabel Saunders, at Stag Valley, in Southland. PHOTO: THE NEW ZEALAND MERINO COMPANY
An Indian businessman who buys large amounts of New Zealand strong wool is disappointed growers are the least profitable in the supply chain and wants to see them better rewarded.

Mohit Kumar Rathi is the fourth generation in his family business Rathi Woollens, a yarn spinner and manufacturer in Bikaner, Rajasthan, in the northwest of India.

Mr Rathi recently enjoyed his first trip to New Zealand, which included visits to a couple of properties, the Saunders family’s Stag Valley at Castlerock, near Lumsden, and Wharenui, near Rotorua, run by the Ngāti Whakaue Trust.

He was disappointed to learn shearing costs often outweighed the price paid for the wool.

A public but unlisted company, Rathi Woollens was established by his great-grandfather, Lalchand Rathi, in 1948.

The business — which last year started supplying Ikea — is India’s biggest importer of carpet-grade raw sheep wool, importing 7000 tonnes a year.

While it also sourced wool from Europe, the Middle East, North Africa and Asia, its main focus was now New Zealand and it was a significant customer of the New Zealand Merino Company, Mr Rathi said.

Over the last couple of years, he had noticed customer behaviour was changing. There was a move against man-made fibres and a desire for traceable and sustainable fibre, and he was increasingly fielding inquiries about New Zealand wool.

The "new generation" wanted to know where their fibre was coming from and how it was handled, and he had that opportunity to see that first hand by visiting several woolsheds.

Rathi Woollens was a big proponent of natural fibre over synthetics and had signed up to the Responsible Wool Standard (RWS).

Mr Rathi cited the benefits of "lovely" New Zealand wool, including its fire-retardant properties, its lustre, resilience and lack of vegetable matter. He was also impressed by the care taken of the sheep, the climate and where they grazed.

Rathi Woollens had been doing business in New Zealand for about 20 years but that had been ramped up over the last couple of years amid increasing demand, he said.

It imported 1500 tonnes of New Zealand wool last year and was targeting 2000 tonnes — or more than 100 containers — this year, possibly even more.

Mr Rathi said it was imperative to keep the standard of the clip high, particularly as man-made fibres were "so cheap". But those fibres were also risky to use, particularly when it came to catching fire.

He believed branding was the key in the future, likening the sale of merino wool to outdoor clothing brands like Icebreaker and Mons Royale, but targeting branded carpet.

There were many people with money to spend on interior decorating.

He was keen to return to New Zealand — where he had enjoyed a mix of tourism activities and business — and the company would "definitely" be growing its business here, he said.

New Zealand Merino Company assistant commercial manager Mike Gourdie said it was an "absolute pleasure" to have someone like Mr Rathi recognise the work being done and what his company was trying to achieve.

The pair talked regularly, often on a weekly basis, and, through that regular communication and discussion, had been developing the business.

It had been "absolutely refreshing" to have Mr Rathi, who was "a bit like a sponge" and eager for information, in New Zealand, and they had already developed some opportunities they were going to build on in the next year.

Preparation was recognised as the key to leveraging contracts and good prices, Mr Gourdie said.

He described the early winter shorn wool as being excellent colour, sound and gutsy, and of good length — "really lovely wool we can place in many different markets through Europe and India".

The Ministry for Primary Industries’ "Situation and Outlook for Primary Industries" report released last month said wool export volumes in the first nine months of 2023-24 were 15% higher than the same period last year, due to a surge in demand.

Despite the better-than-expected performance, wool export revenue was likely to drop 3% to $390 million in 2023-24 as the average export price for all types was expected to fall below the 2022-23 export price, it said.

In the year to June 30, 2024, strong-wool export prices were expected to rise to their highest level in four years while fine- and medium-wool export prices were expected to fall.

Export revenue was projected to decline slightly in 2024-25 as subdued demand from China was likely in view of relatively weak household discretionary spending.

The sector had been pursuing initiatives to grow its export revenue. Wool Impact and Campaign for Wool forged a strategic alliance to promote the growth of the sector, the report said.

Breakthrough technology had been developed to create a new use for strong-wool fibre and turn it into a wool keratin-based pigment, which could potentially consume 20% of New Zealand’s strong-wool clip in the future.

Strong wool made up 70% of wool-export volumes in 2022-23. The recent reopening of the scouring facility in Hawke’s Bay, which sustained extensive damage due to Cyclone Gabrielle, had significantly reduced capacity pressures and boosted buyers’ confidence and was expected to lift the economic opportunities for the sector.

Beef + Lamb New Zealand forecasts shearing expenditure to rise 4% in 2023-24 to average $29,500 per farm.

Shearing expenses are expected to account for 91% of wool revenue.

sally.rae@alliedpress.co.nz

 

Sponsored Content