Key Points:

Rural services company Elders has signed a deal with a major United States carpet retailer to supply it directly with New Zealand strongwool.

It says the move is specifically designed to boost abysmal wool prices.

It is also in apparent competition to the Theresa Gattung-led Wool Partners International initiative, aimed at achieving the same result.

Wool prices have sunk to unsustainable levels in recent months, and it's generally accepted that unless the fragmented industry unites to reposition the product as a luxury, sustainable fibre, world supplies will shrink as growers get out of an unprofitable business.

Stuart Chapman, managing director of Elders Rural Holdings, says the deal with carpet retailing giant CCA Global Partners does just that.

CCA has 14 affiliated companies, with retail brands such as CarpetOne and Flooring America. The Elders partnership also involves five large US carpet manufacturers.

Chapman said Elders, as a procurer and exporter, now had a direct deal with manufacturers and retailers, so was linking the supply chain. "That's exactly what the wool industry wants, a grower-to-consumer product."

It was too early to put a number on how much the deal would boost returns to farmers. "We wouldn't be doing it if we didn't see an opportunity to add value in terms of the whole programme."

He said one of the advantages of the deal to CCA was surety of wool supply.

The partnership, known as Wool Marketing Enterprises, would develop a luxury wool carpet brand that will be sold in stores across the US.

CCA chief product officer, Charlie Dilks, said this had been a gap in the market for some time. "When Wool Marketing Enterprises approached us with their quality and sustainability story about New Zealand wool carpets, we saw the compelling story we need to attract consumers."

Stuart Chapman expected WME to grow: "There will be further announcements where you'll see that there'll be a number of groups that want to attach themselves to this initiative."

Wool Partners International chairwoman Gattung said New Zealand had 120 million kg of strongwool to shift a year, and "there's certainly room for Wool Partners and Elders".

She was coy about whether Elders had beaten her own organisation to a direct deal with an overseas carpet retailer, but said there was room for deals with more than one retailer or manufacturer.

Elders represents 25-30 per cent of the nation's wool clip.

Wool Partners is a joint venture between rural services company PGG Wrightson and the newly formed farmer co-operative Wool Grower Holdings.

In March Wool Partners will go out to growers to persuade them to join the new initiative.