Friday, March 29, 2024

LAND CHAMPION: Wool fashions farming’s future

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New Zealand Merino chief executive John Brakenridge has seen the future of the primary sector and pioneered many of its elements well in advance of most farmers, their processors and exporters.
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Few people in NZ can claim the transformation of a primary industry through their life’s work and fewer still have taken the principles uncovered beyond their home industry for the betterment of the sector.

All that has been done by Brakenridge’s ideas, enthusiasm, business relationships and persistence.

The forging of long-term supply contracts between wool growers and apparel brands like Icebreaker, Smartwool and John Smedley was only the beginning of his influence in the late 1990s.

The revolution in the fine wool industry has been achieved with 25 years of innovation using principles he believes are applicable in all other supply chains.

Volume to value was one of the first, long before Fonterra appropriated it.

Making premium payments for specification and specialisation is another principle, which addresses a structural problem inherent in farmer co-operatives, Brakenridge believes.

The New Zealand story of environmental care, quality and sustainability is now spreading well beyond NZ Merino’s ZQ integrity brand, launched way back in 2006, when it was among the first of its kind.

ZQ incorporates carbon footprint, farm environment plans, water quality, animal welfare and five animal freedoms, full product traceability and transport and handling protocols, all independently audited.

Innovation with wool fibres has produced Allbirds shoes and Firewire surfboards and is now being further extended through the just-launched ZQ Studio product development and accelerator centre in Christchurch.

Earlier this decade Brakenridge also began the Te Hono movement of leadership, trust and collaboration among NZ agribusiness executives, through which more than 250 people have attended Stanford Graduate School of Business courses and remain connected alumni.

He has been consistently generous with his ideas and his time, having served on the Wool Industry Task Force, the board of Landcorp, the steering group for the W3 Wool Unleashed primary growth partnership, the Alpine Origin Merino lamb joint venture with Alliance and the Primary Sector Council.

NZ Merino recently won the supreme award at 2019 NZ International Business Awards as well as the excellence in design category.

It began with what was thought a divisive idea – to use the compulsory 6% levies and substantial reserves paid by fine wool growers to the old NZ Wool Board for the branding and staffing of Merino NZ.

Farm leaders such as the late Robert Jopp of Moutere and Bendigo Station’s John Perriam negotiated the withdrawal, formed a new marketing company and Brakenridge came on board in 1995.

Auckland-born, he has horticulture diploma from Lincoln University and an Master of Business Administration from Canterbury University and previously worked here and overseas for Cedenco Foods and the Horticulture Export Authority.

His lack of familiarity with the multi-stage wool value chain enabled him to come up with another way and to convince growers to change their allegiances from the traditional wool brokers.

Large users of NZ fine wool in manufacturing like John Smedley in Britain, Loro Piana in Italy and the NZ start-up Icebreaker were willing to fix their forward-buying prices for increased certainty over their costs.

The challenge was to find mutually agreeable contracts that growers wouldn’t disown when the volatile auction prices rose and for them to see value in long-term relationships with buyers.

“Linking growers with end-brands for everyone’s benefit seemed to me to be so logical and intuitive, something that my brother Brian had demonstrated with Pohuenui Station and Icebreaker.

“But the wool industry was entrenched and conservative and profits were made from price volatility and blocking knowledge at stages along the supply chain.

“Our model was almost the opposite and was going to cause ructions.”

On the demise of the Wool Board many fine wool growers established the NZ Merino Company and voluntarily paid it to market on their behalf.

It remains a private company chaired by Ruth Richardson with an extensive farmer registry and Brackenridge is the largest single shareholder with 6.5%.

It negotiates term contracts between suppliers of certain micron ranges and wool descriptions and willing buyers with mills and garment manufacturing. 

NZM charges brokerage to employ more than 50 staff including researchers and designers.

It also fosters sheep production science in genetics, best-practice management, improved animal health and forage systems.

Over two decades NZ fine wool prices have risen from less than $10/kg clean to more than $20 today, to the envy of Australian producers.

The industry has 500 growers, annual revenue of $160-$170 million, and 70% of the clip is sold on contract, the rest at auction in Melbourne.

NZ Merino buys fine wool in Australia and South Africa to supplement the local supplies and has extended its contracts to mid-micron and some strong wools.

“Non-apparel wools and interior textiles largely still have the old trading model and need to tell new stories or at least tell their own stories in new ways.

“We think there are significant opportunities in the building materials like floor coverings and insulation.

“The sheep industry needs a champion and there is no other organisation with the track record and resources we have.”

Synergies across the wool industry could also provide NZ Merino with greater scale to extend its presence in international markets.

“The average child in the United States spends more time inside than a prisoner and the average wearing of a synthetic garment is seven times.

“Wool is not trying to be fast fashion; it’s slow fashion.”

About 20% of high country land has been set aside as a result of tenure review so those farmers understand the shift from volume to value now faced by much of NZ farming, Brakenridge said.

Other primary industries will follow the same path, largely forced on them by consumer preferences but better prices will not fall into their laps without better stories and customer relationships.

Te Hono brings together the lessons already learned and the stories told to take advantages of synergies and reputational commons, he said.

Hono tangata, hono whenua, hono kit e ao, strengthening relationships by linking to the land and connecting to the world.

“So many in our sector have been able to step outside their industries and see what is coming at them – Impossible Foods, the circular economy, the conscious consumer.

“How companies and our government embrace that is up to them but as much as we can we have encouraged the sector to get together.”

Brakenridge believes NZ can be an exemplar of environmentally responsible primary production – a Garden of Eden.

“The Maori component within Te Hono has been a revelation.”

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