Wool co-op’s gear catches retailer’s eye

Wednesday, 15 January 2020

By Brent Melville

Local Dunedin startup wool network AgMatch has attracted the eye of one of Australia’s biggest retail groups, Frontline.

The online selling group — owned by about 650 farmers and supported by a network of 2500 farmers and rural supply businesses — will be fulfilling an initial inquiry for garments from Frontline across a number of its broad retail base of almost 700 stores.

Wool products such as jerseys, workshirts, socks and baby blankets are produced under the company’s AgWool brand, sourced from 28-32 micron lamb wool and hogget wool.

AgMatch founder, former Tamahine Knitwear owner Ken Algie, said AgWool represented a ‘‘pure co-operative’’ with contributing farmers retaining control of the process, taking on both the risk and return from the farm gate, through design and processing to delivery.

He said the group was made up of 20 South Island woolgrowers keen to elevate returns for their clip.

‘‘Returns to date had been positive,’’ he said.

‘‘Farmers who had initially committed lamb and hogget wool into the jersey programme have seen their returns climb to between $20 and $40 a kg,’’ he said.

This compares to the current gross commodity price of about $5/kg for similar quality lamb wool.

Mr Algie said AgWool now had its sights set on the quality wool carpet, building insulation and industrial markets, using main shear wool from 33-40 microns.

The company had commissioned an initial run of about 150 linear metres with New Zealand Yarn, of Christchurch, enough to fully carpet about seven to eight average homes.

He expected the new range to return between $250 and $300 a metre, or about $13/kg greasy for 34-39 micron main shear wool at the farm gate.

This compared to an average auction price for full fleece wool of between $3 and $4.

‘‘By using the right wool selection direct from the farm allows us to get the blends right, giving an ideal yarn for further manufacture of a number of items, meaning we are able to produce end products that are desirable, have fantastic hand-feel with great wearability.

Mr Algie said it was no secret that the wool manufacturing industry had been in decline both in New Zealand and globally for a while, relegating crossbred wool to a byproduct.

‘‘Manufacturers have effectively turned into wholesalers, closing their local manufacturing plants and increasing margins by buying from countries with better buying prices.’’

Mr Algie said while this has meant improved returns, it had reduced the overall use of New Zealand quality wool.

‘‘To get better outcomes, farmers need to look after their own businesses by taking control of their own markets.’’

AgWool director and farmer Rick Cameron said what made the concept different was the true involvement of farmers through the process.

Mr Cameron said the response has been overwhelmingly positive, from farmers and trade alike.

‘‘Our product is sustainable and capable of scale, without government money or political involvement. It is about a whole new model to sell wool by retraining growers and regenerating the thought processes.’’


Now we’re in the Otago Daily Times Rural Life Publication!

”You can have any colour jersey as long as it’s blue.”

An investment of $140,000 in a pilot wool clothing project has kick-started a unique selling opportunity for eight South Island sheep farmers.

The farmers, who committed an initial 2800kg of lamb and hogget wool to local Dunedin startup Agwool, have managed to elevate their returns to more than $40/kg for 31-32 micron wool. This compares to a current gross commodity price of around $5/kg for similar quality wool.

The fibre, scoured in Timaru, and processed into worsted yarn in Napier, is produced into high quality jerseys and other hardwearing gear in China. It is sold under the Agwool brand, the brainchild of former Tamahine Knitwear owner Ken Algie.

The strength of the model is that it is specifically designed to reduce intermediary costs and return the full margin to the farmer investors.

”It’s a simple structure aimed at cutting out a lot of inherent industry costs related to procurement, marketing and the retail trade,” Mr Algie said.

He said the original investment was truly a ”leap of faith” by the original farmer group, who are also members of Agmatch, an online selling network of around 2500 farms and rural supply businesses.

That leap of faith extended to the use of crossbred wool for worsted yarn.

”Wool was supplied to very tight specifications and the original investors took on board the initial risk of scouring, testing and yarn production costs.”

The pilot also gave them an insight into the sales process.

”One of our guys has sold 70 jerseys already and he reckons he’s only just getting into his stride,” laughs Mr Algie, who acknowledges there have been challenges but ”we’re all learning as we go”.

The venture has paid dividends. Mr Algie said the initial run of 1700 windproof jerseys has virtually sold out, even without any retail involvement.

Part of that is related to the price, which at $184 is around 60% of what the recommended price would be at shop level. This translates to a per bale price for crossbred wool of more than $7800, the majority of which is returned to the original farmer investors.

Agwool director and farmer Rick Cameron said the true differentiator is the direct involvement of the farmer directors.

”You should have seen the shearers and wool handlers smile with pride when we walked into the shed wearing these quality jerseys, made with the very wool that they had handled.”

Mr Cameron said the response has been overwhelmingly positive, from farmers and trade alike.

”It proves our product is sustainable and capable of scale, without government money or political involvement. It is about a whole new model to sell wool by re-training growers and regenerating the thought processes.”

Mr Algie said the success of this pilot project had encouraged Agwool to expand the product range into other lines, including socks, beanies and work shirts. The company is also evaluating insulation and carpet, for which it already had good initial inquiry.

He said the true value of the company was through its large network under the Agmatch platform, which has around 550 members who pay an annual fee of $500. Its e-commerce functionality allows farmer members to purchase a range of farm inputs, from professional services to fertiliser.

-By Brent MelvilleSouthern Rural Life
July 10 2019

Read the full issue here




From Country Life, 9:15 pm on 5 April 2019

AgMatch is a web-based initiative that gives farmers, who pay an annual membership fee, access to lower-priced farming supplies and hopefully increased returns by using their combined numbers as a bargaining tool. It’s the brainchild of Otago businessman Ken Algie.

His latest project is a wind-proof jersey. The crossbred wool for the jersey and the funding for the knitware venture are supplied by several South Island sheep farmers and AgMatch members. Their next goal is to produce socks and a line of carpet.


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