Wools of New Zealand and meat processor Alliance have teamed up with CRA International, which manages Global Dairy Trade, to launch the Natural Fibre Exchange (NFX) with the two-weekly sales starting on May 22.
The NFX partners have committed 6.5 million kilograms of wool for the coming year with work under way to attract other suppliers, Wools of NZ chief executive Rosstan Mazey said.
The aim is to secure a third of the crossbred clip within three to five years.
Sources say NZ’s average annual clip is about 750,000 bales with 50% to 60% sold at auction.
Wool Services International chief executive John Dawson said if NFX makes commercial sense his company will consider using it.
“It’s early days but if it makes sense commercially for companies like Wool Services International then we will do so.”
But farmers value personal, face-to-face relationships and dealing with companies.
“My prognosis is if it proves itself commercially successful then it will go.”
PGG Wrightson wool manager Grant Edwards is also open-minded and plans to register with NFX as a buyer and seller and see how it develops.
Both said it is too early to say what the impact on the existing open-cry auction system, forward contracts and private buyers will be.
Wools of NZ has operated dual selling systems of contracting branded wool and product with points of difference alongside a weekly tender and Mazey said the time is right to go to the next step with NFX.
“That has enabled us to make the transition now.”
Brokers selling through NFX will be charged a fee of 3.7c/kg to 5c/kg.
“Initially, the focus will be on securing support for greasy wool with potential to develop other offerings,” he said.
The selling platform has been set up to handle wool from other countries along with other natural fibres.
Mazey said WNZ has spoken to those involved in the existing auction system and they acknowledged the role of online selling.
Wool offered on NFX will be listed with specifications and a minimum or reserve price.
Buyers can view the offering from 48 hours before trading opens, after which the various lots are available to be bid on during a series of rounds that continue until there is a round with no new bids.
“Buyers, in turn, can compare all prices in real time with all parcels of wool available simultaneously over multiple rounds of bidding.”
Mazey said NFX will also provide an objective reference price for both buyers and sellers.
Alliance strategy head Nigel Jones said wool is an important source of income to its farmer shareholders so it is interested in exploring any opportunities to improve prices.
“We are a material seller of wool so we are excited about the potential benefits this technology offers to the co-operative including improving efficiencies and ease of doing business.”
