New Zealand-Merino Wool.

LIKE its Australian counterpart, New Zealand’s small Merino wool industry has its share of troubles, but not everyone is hurting.

The determination of a few New Zealanders to overcome the flaws of the wool auction system, and the Kiwi genius for marketing, means that the country’s Merino wool punches well above its weight in global brand recognition, carried along by native clothing brands like Icebreaker.

Woolgrowers are playing their part by abandoning the auction system in favour of contracts with the clothing and textile brands that are carving new niches for their wool.

Contract wool prices aren’t always ahead of the auction price, but consistent pricing that can be budgeted on years in advance is earning growing favour over the Tasman Sea.

New Zealand Merino (NZM) was the company that helped start it all 12 years ago

Its chief executive officer, John Brakenridge, has forecast that just less than half of New Zealand’s 10,000 tonne Merino clip will be sold privately this year.

NZM will handle 80 per cent of all the contracted wool.

Meat and Wool New Zealand’s economic service paints a different picture.

Its latest figures for merino clean wool sales say that 4441t were sold under auction from July 2008-February 2009, compared to 2327t sold privately.

Mr Brakenridge predicts the auction system will slip into second place in the near future and progressively diminish in importance as the growing sophistication of the private supply chain delivers rewards to both ends.

NZM is a 50:50 joint venture between New Zealand Merino producers, represented by Merino Growers Investment Ltd, and multi-faceted agribusiness PGG Wrightson.

The company doesn’t buy or handle wool.

Instead, for a 4pc commission on wool sales, it makes the connections between the manufacturers and retailers who want wool, and the producers able to provide it to specification.

"Our starting point is how we can add value to a retail brand," Mr Brakenridge said.