Deer Industry NZ: Velvet prices tipped to be stable in year

The deer velvet market is looking stable this year.

The velvet market is expected to be reasonably stable during the 2018-19 season, as consumption in Asia increases in line with production growth in New Zealand.

Apart from a brief dip in prices two years ago driven by uncertainty about regulatory changes in China, New Zealand velvet production and prices have increased for the past eight years.

Deer Industry NZ (DINZ) Asia manager Rhys Griffiths cautioned that trend could not continue indefinitely.

There were always "unknowns'' that could upset the market, such as an escalation in the trade war between China and the US.

But based on all the known factors, deer farmers could expect another good year, he said.

"Major velvet exporters and DINZ are working closely together, building demand with major health food companies in Korea. These companies prefer to deal direct with their NZ suppliers and put high value on price stability. It gives them the confidence to invest in product development.''

Branded health foods based on New Zealand velvet had transformed the Korean market. Creating a similar product category in China was a priority for the industry, Mr Griffiths said.

"In contrast, for the commodity traders who still buy two-thirds of NZ velvet, price instability can be a good thing. So despite good prices we are putting a lot of energy into building strong relationships with manufacturers and marketers in our major markets. We are taking control of our own destiny and making the commodity traders less relevant.''

About 200 tonnes of the expected 725-tonne 2018-19 harvest would go to companies selling high-value branded products in South Korea, a market segment that did not exist 10 years ago. DINZ has been working with Chinese regulatory agencies to provide a clear pathway for imports of New Zealand velvet to manufacturers in China.