Saxon recovery

Price premiums heal Saxon wool recovery


Sheep
Wool Excellence Club members Dominic and Tim Bower, Stanley Vale Merinos, Uralla,NSW, with Vitale Barberis Canonico raw wool manager Davide Fontaneto.

Wool Excellence Club members Dominic and Tim Bower, Stanley Vale Merinos, Uralla,NSW, with Vitale Barberis Canonico raw wool manager Davide Fontaneto.

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THE historic fall in superfine, traditional-type wool fleeces in the past two decades has European luxury fabric makers bidding large in an effort to stimulate a recovery of Saxon and Traditional fine crimping Merino wool.

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THE historic fall in superfine, traditional-type wool fleeces in the past two decades has European luxury fabric makers bidding large in an effort to stimulate a recovery of Saxon and Traditional fine crimping Merino wool.

To combat the sharp fall in superfine wool production, Italian textile company Vitale Barberis Canonico (VBC) established the Wool Excellence Club in 2014, offering on average 40 per cent more than the current auction market for traditional-style Saxon wool to its 24 Australian woolgrower members.

Founded in 1663, the textile company is located in Italy’s northern region of Biella and produces eight million metres of fabric a year, with a turnover of 116 million Euros and employs 400 workers.

“Saxon fibre was disappearing because of the difficulty to run Saxon-Merino sheep and their smaller cut per head,” VBC raw wool manager Davide Fontaneto said.

“Most of the growers in the last 10 years changed their breeding direction with the aim to have a higher cut per head which means they have lost the Saxon characteristics.”

In the beginning of the 1990s, VBC began monitoring the fall in the supply of these special types of wool, recording current and former Saxon-Merino woolgrowers.

Since then, the Australian national flock numbers have fallen dramatically, particularly for superfine sheep, falling by nearly 100 million since 1991.

Selection for the Wool Excellence Club was made by VBC in consultation with their buying arm, New England Wool.

There are signals showing the price premiums offered by the Wool Excellence Club in the market are encouraging a recovery of Saxon merino wool with acquisition growing from 2000 bales in the first year to 4,000 bales in the current season of VBC’s 30,000 bales purchased in Australia annually.

On average, for each kilogram of saxon wool purchased, three metres of fabric must be sold.

True Saxon type growers invited to be part of the Wool Excellence Club can receive a 40 per cent premium. Members are required to be accredited under the SustainaWOOL Integrity Scheme, which was launched in March 2015 by New England Wool.

To qualify for the scheme, wool must be environmentally and ethically produced, as well as fully traceable back to the farm and even individual sheep.

Under the VBC Wool Excellence Triple Option Contract, (as it is offered as a three year contract), a further 10pc price premium is offered for non-mulesed status wool.

Mr Fontaneto said the saxon wool scheme currently costs VBC a further $1 million above current market values.

“We are conscious that this is a long term investment because we do not wish to lose this kind of wool,” he said. 

“Not only are we trying to guarantee the future of those breeders but ours too.

“We have also lost a few club members because their production was not going towards our goal.”

There is an ambitious target to grow the members by a further 16 in the coming years, with the hope that a large percentage of VBC’s wool acquisition will be delivered by club members.

Mr Fontaneto said the company also attempted to support current non-members, but who were breeding towards the criteria of this elite club, through special bidding instructions at auction on suitable lots with saxon characteristics.  

“When our buy finds a lot of Saxon wool on the show floor, they have special limits to put on those lots,” he said.

“The problem is that in the auction system, the market price is not achieved so much by the last bidder, but the second (last) bidder.

“So to show a premium, in some cases, buyers are allowed to make their first bid using the special VBC price limit, which in most cases is much higher than where the normal bidding finished.

“It is to show to the market we are serious, and we are here to offer an attractive return to those producing this kind of wool.”

The story Saxon recovery first appeared on Farm Online.

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