The velvet market is in a good space, Deer Industry NZ says.
DINZ Asia markets manager Rhys Griffiths said the market is steady going into the new season but demand will have to increase to absorb future production increases to maintain the steady returns.
Last season about 800 tonnes were exported, up from 700 tonnes the previous season.
On the back of growing herd numbers, genetic improvement and better herd management this year’s production is expected to lift again.
While not predicting an easing of prices this season Griffiths cautioned there are headwinds including trade tensions between Japan and South Korea and the trade war between the United States and China.
Economic growth has slowed in South Korea, the largest velvet market.
“Healthy food companies are cautious about their ability to absorb increasing NZ production.”
Echoing the positivity for the new season Provelco, a farmer-owned exporting co-operative, general manager Ross Chambers said the days of speculating are over and it’s now about building trusting relationships.
The co-operative, formerly Velexco, celebrated its 20th anniversary this month and more than ever the co-operative principles suit new-age velvet markets where strong provenance is an important feature, Chambers said.
“By developing strong relationships with a client base in China and Korea the co-operative has developed greater confidence and certainty from focusing on win-win, moving on from the traditional velvet sales that almost always resulted in sellers and buyers alternating between win-lose outcomes.”
Chambers said markets are now based on ongoing business with regular customers.
“Gone are the times when we put product in the market and someone turned up, saw an advantage and bought it.
“We are seeing clear evidence now of greater market maturity based on a quality product with honesty, integrity and trust that builds relationships and brings repeat business.”
The confidence means Provelco can this season pay $100 a kilogram deposit on main grades with the balance paid throughout the season.
The lift from $50/kg in previous seasons has come from the focus on regular, repeat business to an established customer base.
“Health food companies using NZ deer velvet need the confidence of origin that fits well with the profile of a grower co-operative.
“Environmental concerns, animal welfare and social responsibility are now frequent themes that were never mentioned even three years ago.”
In Korea the number of companies putting deer velvet in health tonics has grown strongly.
China is a latent opportunity where, despite rapid modernisation, consumers understand the importance of deer velvet as a traditional Chinese medicine ingredient, Chambers said.
