WITH velveting underway, reform of the deer industry won’t happen this season, but a recent consistency in sales had generated confidence among producers.
Mixed grades of velvet were fetching almost $80/kg, Velexco chairman James Guild said. It fell short of early expectations for over $100/kg, but it was possible present prices would be exceeded later.
However, it was still barely covering costs. Mr Guild said the break-even figure for velvet producers was $100kg or slightly under, which, once achieved, should inspire them to remain in the industry instead of considering competitive land use, such as dairy grazing or lamb finishing.
Although deer farmers are used to the highs and lows of the industry, the past five years had been particularly tough, which led to some quitting. As a consequence, the national deer population was down, along with volume and throughput at processors.
The industry has a number of issues to deal with – paramount was the need for consolidation of the velvet pool, because from unity would follow positive changes and stability for venison production.
This was not easy, considering that a large portion of velvet was produced as a secondary commodity of venison from smaller herds.
Many of the people involved in that side of the industry were lifestyle farmers, semi-retired, and enjoying the competitive side of antler production, some of them have less financial commitment than large scale operators and were therefore not as easily swayed to commit to the large pool concept.
Neither velvet nor venison complements the other in terms of livestock management, Mr Guild said, though they were solvable issues.
A large unified velvet pool would provide strength in terms of volume and negotiable clout with Korean and Asian buyers who tend to deal with sellers with the most volume.
Bulking up supply seemed to be the accepted way among commodity marketers, and appealed to young farmers who had entered the industry. Mr Guild said, however, such a strategy could rebound on sellers, as it could strengthen a buyer’s position when he knows the seller has to quit volume at any cost.
Unity equals reform and for the velvet industry would also impact positively on the sales side, and enable generic promotion and more control of supply.
The Russians, New Zealand’s main competitor, have a measured plan for selling their velvet which appears to work favourably.
Such issues can be transcended, Mr Guild said. This was why Velexco had company representatives living in Korea, specifically to learn and understand the fickle nature of Korean market forces and to develop long-term relationships.
“Because, as was often the case, the Koreans will overlook the trading issues in favour of relationships.
“It’s about trying to understand the sometimes volatile nature of all of the Asian market requirements.”
Last year, for example, the buying power from China came from the military. Mr Guild said there was huge potential for velvet consumption in China.
Recent talks between Velexco and PGG Wrightson had failed to establish the much needed reform necessary, and Velexco had notified its members of the setback.
Meanwhile, Mr Guild urged all suppliers to support the co-operative, because by doing so this will build volume and strengthen the power base for subsequent negotiations with interested parties.
sandyfinnie@xtra.co.nz
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