New Zealand carpet maker Bremworth is hoping to boost confidence in the wool sector and is offering 10-year contracts for strong wool producing farmers.
Wool prices have been in the doldrums for years. These days, it costs more to shear a sheep than the wool is worth.
Bremworth chief executive Greg Smith said the contracts would hopefully give generational security to sheep farmers.
Smith has some experience with 10-year contracts, having been at the helm of fine wool apparel manufacturer Icebreaker when that company introduced them.
“The feedback we got from farmers who were, at the time, still under pressure even in the fine wool industry, was that it provided their family a security which they otherwise didn’t have under the auction system.
“And that security was bringing their daughters and their sons back to the farm, getting them re-thinking what the future could look like.
“The 10-year contracts provided that for fine wool, and so, considering the trouble and stress that’s going on-farm at the moment with huge inflation and all the legislation, having a 10-year contract could give them [strong wool farmers] the same sort of security, albeit at a different level, to try and bring these kids back to farming, and to keep people farming in general, as opposed to deciding to plant trees or shooting sheep.”
Smith acknowledged providing a farmer-agreed minimum floor price was expensive for the company but without quality wool “we have no business”.
He said some large-scale producers had already come on board and there were opportunities for smaller growers too.
As demand for wool increased, as he believed it would, Bremworth wanted security of supply.
The company uses about 3 per cent of New Zealand’s wool clip.
Smith has recently returned from meeting a business partner in Vancouver and said it was good to gain up-to-date information on the flooring sector in North America.
For him the message was clear, there was strong demand for luxury wool carpet and “little competition” - most soft floor coverings are synthetic and there needed to be a cheap way to reach them with the wool story.
“There’s some really cool digital partners that we’re looking to work with up there who connect brands with consumers in a digital way as opposed to a physical way,” Smith said.
“And then you have physical representation to support that, but ultimately everyone does their enquiry online which is easier and cheaper than trying to be across the thousand stores in the US.”
Smith said the company was working to increase carpet production with its Whanganui yarn spinning plant doubling output and overseas yarn suppliers now starting to “deliver what we need”.
There was strong demand for wool carpet in Australasia, but the company was also exploring, and keen to re-enter, the North American market, he said.