By Chris Barton
A new internet-based system for trading wool aims to have 10 per cent of New Zealand sheep farmers signed up within a year.
The new system - an alternative to the traditional auction - is called Woolnet, and is the creation of Wool Group subsidiary WoolPro, which has invested
$500,000 in the scheme.
WoolPro believes the internet-based system, which goes live in September at www.woolnet.co.nz, is a world first for a major farm-based product.
Described as a "facilitation environment," Woolnet provides an alternative to the auction for buyers and sellers of wool, including farmers or their agents.
WoolPro's managing director, Lance Wiggins, said research had shown that farmers were attracted to the concept, not because of lower commission costs but because the system enabled them to get direct control of sales.
To sell via the Net farmers will pay $50 per lot and then 1c to 1.5c a kilogram. For a 20-bale lot that works out to about 9c a kg compared with around 20c a kg under the auction system.
Special projects manager Paul Stanley-Boden said Woolnet needed about 5 per cent of New Zealand's 17,000 sheep farmers to use the system for it to be viable, but was aiming for 10 per cent in the first year.
About 45 to 50 per cent of New Zealand wool sales are already transacted directly between grower and buyer, outside the auction system.
The site, built and hosted by Glazier Systems and developed by Networking Edge's Jim Higgins, will be tested with farmers next month.
Research has shown that 46 per cent of sheep farmers own a PC and 25 per cent use the internet.
While the home pages containing information about the Woolnet process will be available to all, only registered New Zealand buyers will have access to lots for sale.
Mr Stanley-Boden said overseas buyers would have to work through a New Zealand agent because the intention was to serve and foster local industry.
Bringing overseas buyers into the system was also complicated by problems of verification and the lack of any means to provide the electronic transfer of foreign exchange via the Net.
WoolPro took advice on the legal status of electronic contracts via the Net and believes, even though no signature will be attached to the transactions, that the Woolnet system meets the basic premises of a contract offer, consideration and acceptance.
Farmers can elect to put their lot details on the site at a fixed price or open to offers. The buyer sees a range of information about the wool, including test certificates and who has appraised the quality, and can also link to a grower's own Website - hosted free by Woolnet.
Fixed-price sales are automatically transacted by the system directly from one bank account to another within 48 hours. Lots open to offer are negotiated directly between buyer and seller by email and then confirmed by the system once agreement is reached.
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