Professional Documents
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Araki H.A2
Araki H.A2
Araki H.A2
Table of Contents
Introduction...........................................................................................................................................3
Discussion..............................................................................................................................................4
Stakeholder Expectations..................................................................................................................6
Trends................................................................................................................................................8
International Business.....................................................................................................................10
Risks.................................................................................................................................................11
Conclusion...........................................................................................................................................13
Recommendations...............................................................................................................................14
References...........................................................................................................................................16
Introduction
The history of sheep farming in New Zealand dates back to the arrival of British navigator James Cook
in the late 18th century. Over the years, missionaries, explorers, and settlers introduced sheep to
various regions in New Zealand. Wool quickly became a valuable commodity for export due to its
ease of storage and transportation and the growing demand from the expanding textile industry
During the 1850s, sheep farming expanded to the South Island, significantly increasing the sheep
population (Te papa museum, 1998-2007). New Zealand's economy relied heavily on sheep, with
wool being the country's most valuable export for many years. At its peak, wool exports accounted
While New Zealand is known as the largest supplier of solid wool globally, it has diversified its wool
production with various breeds, including Romney, Merino, Polwarth, Corriedale, and English
Leicester. The country has experienced a decline in sheep numbers in recent years, mainly due to
changing market dynamics and competition from synthetic fibers (Bezuidenhout et al., 2021).
The Merino industry in New Zealand has successfully navigated numerous transformations, shifting
the perception of Merino fabric from a standardized commodity to a globally recognized brand
(Mitchell et al., 2009), in this report, we will explore some of Merino company’s relevant details of
exporting animal products, including wool, and how it requires strict adherence to overseas market
requirements to mitigate the risks of pests and diseases. The Ministry for Primary Industries (MPI)
plays a vital role in assisting exporters in meeting these requirements. Compliance with legislation
and destination country regulations and engaging with verifying agencies is essential for exporters.
Importers of animal products into New Zealand must also ensure compliance with biosecurity
The global wool market faces challenges influenced by geopolitical events and the ongoing impact of
the COVID-19 pandemic. However, there is growing recognition of the positive attributes of natural
fibers, and the wool market is expected to grow due to technological advancements, population
growth, urbanization, and consumer preferences for eco-friendly and sustainable products. The
International Wool Textile Organization (IWTO) has implemented measures to ensure wool quality
and traceability, and digital platforms such as WoolQ are facilitating the industry's transition to digital
Companies involved in exporting wool, such as Merino Company, are required to comply with
approved risk management programs and take on commercial risks. Despite these inherent
challenges and uncertainties, the wool industry in New Zealand remains committed to achieving high
standards and continues to assert its influence as a major participant in the global market (Australian
Discussion
Exporting animal products, such as wool, requires adherence to overseas market requirements to
address the risks of pests and diseases. The Ministry for Primary Industries of New Zealand (MPI) is
crucial in assisting exporters throughout this process. To export inedible animal products, exporters
must process and store them in approved facilities. They must also register with MPI, understand
relevant legislation, fulfill destination country requirements, engage a verifying agency, and comply
When exporting imported animal materials or products, re-exportation is possible if the items
remain intact or are mixed with New Zealand products. The operator receiving the imported material
must possess the original import certificate and evidence of inspection and clearance. In the
certification process, the operator is responsible for providing all essential supporting information,
and any indication of New Zealand origin should be removed. Documentation of the processing for
re-exportation is necessary, and imported products must be identified and separated for traceability
To ensure compliance with biosecurity regulations, importers of animal products into New Zealand,
especially animal fiber and feathers, must adhere to the standards set by MPI to prevent the
introduction of diseases, pests, and unwanted animals (Ministry for Primary Industries, 2023a,
2023b). The Import Health Standard (IHS) provides detailed instructions for importing animal fiber
and feathers. In cases where the product does not fully meet the IHS requirements, importers can
request an equivalence assessment from MPI. Veterinary certificates and declarations may be
required, depending on the type of fiber being imported (Ministry for Primary Industries, 2022b).
Further imported fiber or feather product processing must be conducted in transitional facilities
Sheep farmers in New Zealand face challenges related to animal health and the use of veterinary
chemicals, which can affect human health and wool processing. Stricter environmental discharge
standards imposed by regulators worldwide and additional requirements from consumer product
eco-labels have impacted the industry. Chemical residue surveys and management strategies have
been implemented by the New Zealand and Australian wool industries to address these concerns
Stakeholder Expectations
Several research studies (Beverland, 2005; Lamons, 2005; Low & Blois, 2002; Mudambi, 2002),
indicate a growing recognition of brands as essential for both business-to-business and business-to-
customer marketers. Brands are increasingly viewed as a necessary means of differentiation and
sustainable competitive advantage. When making purchasing decisions, business customers consider
brands to have a significant impact (Bendixen et al., 2004; Michell et al., 2001), serving as a tool to
foster consensus among the various stakeholders involved in the buying process (Webster & Keller,
2004).
The wool market is projected to experience significant growth with a compound annual growth rate
(CAGR) of 4.8% during the forecast period (2023-2028). This growth is attributed to various factors,
including advancements in technology within the wool manufacturing industry. Tools and processes
such as spinning and weaving have increased global woolen clothing sales. A key driving force behind
the demand for wool is the preferences of millennial consumers who highly value quality and
To ensure quality and traceability in the wool industry, the International Wool Textile Organization
(IWTO) has implemented measures that have improved wool standards and higher prices for wool
products. Additionally, factors such as population growth, urbanization, the rising domestic
consumption of luxury wool textiles, and the biodegradable nature of wool have all contributed to
To enhance transparency within the wool supply chain, traceability systems like the National Wool
Declaration Integrity Program have been implemented. These systems provide a means of tracking
the origin and processing of wool, thereby ensuring transparency and accountability (Mordor
Intelligence, 2023).
Regarding regional dominance, the Asia-Pacific region, including countries like New Zealand, China,
and Australia, holds a prominent position in the global wool market as presented in Figure 1.
Australia is renowned for its production of fine Merino wool and is recognized as the leading global
supplier in the industry. The increasing demand for wool in the Asia-Pacific region, as presented in
Figure 2, driven by the eco-friendly and sustainable preferences of millennial and Generation Z
consumers, is a significant factor contributing to the market's growth. (Mordor Intelligence, 2023).
Figure 1 – Wool Market: Sheep Population in Million, China 2018-2020 (Mordor Intelligence, 2023)
Figure 2 – Wool Market: Growth Rate by Region (2022-2027) (Mordor Intelligence, 2023)
Trends
In 2020, the global and domestic industries experienced a significant rise in the use of digital
platforms and reliance on e-commerce. The COVID-19 crisis posed various challenges for businesses,
but many found relief by shifting from traditional commerce to e-commerce and digital channels.
Businesses with a strong e-commerce presence thrived during this period, indicating that e-
commerce is not merely a temporary trend but will continue to grow in importance even after the
WoolQ was developed as a centralized online hub for the Australian wool industry, providing
woolgrowers, their agents, and industry professionals with a comprehensive digital platform. The
concept of WoolQ originated five years ago following a recommendation by the Wool Selling System
Review (WSSR) for a digital information portal focused on enhancing transparency and choice in the
wool industry. The development of the platform was unanimously supported by the Wool Exchange
Portal (WEP) Working Group, consisting of stakeholders from Australian Wool Exchange Limited
(AWEX), Australian Wool Testing Authority Limited (AWTA), Australian Wool Handlers (AWH),
WoolQ was launched in stages between February 2018 and July 2019, adhering to the designated
timeframe and budget. The platform serves as an online entry point for woolgrowers and their
partners to input, access, and store information and data related to their wool-growing enterprises.
It offers various tools for data analysis, empowering woolgrowers to make informed decisions
regarding wool production and sales (Australian Wool Innovation Limited, 2020).
WoolQ also facilitates developing and showcasing comprehensive profiles and value propositions for
wool industry businesses. Users can search and share these profiles to seek partnerships and
relationships within the industry. The platform provides online selling options, offering a cost-
effective alternative avenue for woolgrowers, brokers, and registered buyers to promote and transact
The WoolQ platform comprises several features, as presented in Figure 3, including eSpeci, which
digitizes paper specifications, MyWoolQ for clip-related information storage. Ready Reckoner for
market analysis and benchmarking, WoolQ Market for simplified Australian wool trading, Industry
Network as an industry directory, and Traceability to address the demand for traceability in the wool
supply chain.
WoolQ's strategy focuses on the medium to long term, anticipating increasing returns for individual
woolgrowers through the platform's tools and the overall macroeconomic value it brings to the
International Business
The wool market faces global challenges influenced by several factors, including the Russian invasion
of Ukraine, which has caused disruptions in energy markets and increased energy prices. The
ongoing impact of the Covid pandemic on China's economy, characterized by continued lockdowns
and the persisting challenges in global shipping capacity, further contributes to the market's strain.
Additionally, staffing issues in economies with trading relationships with New Zealand also impact
the industry. Despite these significant challenges, there is a growing recognition of natural fiber's
unique qualities and positive attributes. Although prices, especially for crossbred and strong half-
bred wools, are not at the desired levels, wool continues to be processed in the supply chain,
showcasing the industry's resilience. Fine wool continues to be in high demand and sells well.
Compared to Australian Merino wool, New Zealand Merino wool commands substantial premiums
due to supply quality, farming practices, and forward contracts that drive the market. Growers who
offer well-prepared and high-quality wools of all types still benefit from premium prices at the
Currently, auction prices for crossbred wool in the market remain below satisfactory. However, there
is a positive trend regarding color and style offerings, which receive favorable reception due to their
limited supply. These wools generate intense competition in auction rooms, although their value may
reach a specific limit. Conversely, prices for poorer wool styles still need improvement, and extracting
reasonable value for these types remains challenging. The prices obtained for them are
unsustainable, even though they are being sold. The peak supply of these wools occurs between
January and March, but effective management in the supply chain has prevented the accumulation
of a sizeable unwanted stockpile. The main New Zealand wool scours in Awatoto, south of Napier,
which processes North Island wool, is currently out of operation due to the impact of Cyclone
Gabrielle. However, it is expected to resume operation by the end of 2023. In the meantime, supply
chain flexibility is being utilized by redirecting wool intended for Awatoto to the smaller Clive plant
on the North Island or to the Timaru scour on the South Island. While efforts are being made to
ensure the flow of wool through these alternative scours, delays should be anticipated for those
seeking to have North Island wool scoured in the coming months. Encouraging signs are seen in the
late results from the early May sale of North Island wool in Napier, which showed improvement
compared to the previous sale. These results provide optimism that the industry will overcome the
current challenges. To address concerns about supply chain volumes, efforts are being made to
establish closer collaborations with overseas manufacturers. Several visits have occurred since the
beginning of 2023, allowing manufacturers to engage with growers, gain insights into their
perspectives, and strengthen relationships. This alignment between manufacturers and growers is a
positive step, particularly considering that some manufacturers are undergoing significant
expansions. Additionally, there is positive news from China, as they are increasing export volumes
and recovering from the impact of the past three years. Gradual reopening of borders and a return to
higher levels of economic activity following their prolonged Covid lockdown contribute to the
Risks
Animal products must be produced and processed within registered risk management programs
with exemptions for certain commodities. Storage facilities, processors, and other entities must also
operate under appropriate registrations from MPI. The application for official assurance includes
information from the Eligibility Document (Ecert ED) chain. If the product is processed outside an
approved RMP, it loses eligibility for an official assurance and export (Ministry for Primary Industries,
2021).
An exporting company must fulfill its responsibility by promptly notifying the Ministry for Primary
Industries (MPI) within 24 hours if certain situations arise with inedible animal products intended for
export. These situations include the product becoming unsuitable for its intended purpose, being
rejected by a foreign government upon entry, failing to meet the relevant Overseas Market Access
Requirements (OMARs), or needing more export documents. The company can utilize the export
non-conformance report or a dedicated form to inform the MPI, ensuring that all the required
information is included in the notification. Contacting MPI is essential if the products do not meet
Exporters bear the commercial risk for all consignments certified under the Official Assurances
Specifications for Animal Material and Animal Products. This means that exporters recognize and
accept that the Ministry for Primary Industries (MPI) issues certificates in good faith, relying on their
assurances that all necessary inquiries have been conducted. It is understood that there are no
known barriers to the entry of the product in the destination country. The exporter also
acknowledges that if the overseas market authority refuses or fails to accept the animal material or
product, MPI will not intervene. MPI cannot be held liable for any resulting loss. Additionally,
suppose the exporter's request for export certificates contradicts established export requirements
or is solely intended to meet their commercial arrangements. In that case, MPI will not fulfill the
Conclusion
The history of sheep farming in New Zealand dates back to the late 18th century, with wool quickly
becoming a valuable commodity for export. Despite facing challenges such as changing market
dynamics and competition from synthetic fibers, New Zealand remains the largest supplier of solid
wool globally. It has diversified its wool production with various breeds. The Ministry for Primary
Industries (MPI) plays a vital role in assisting exporters in meeting overseas market requirements and
The global wool market is projected to experience growth due to technological advancements,
population growth, urbanization, and consumer preferences for eco-friendly and sustainable
products. The International Wool Textile Organization (IWTO) has implemented measures to ensure
wool quality and traceability, and digital platforms like WoolQ are facilitating the industry's transition
to digital solutions.
The Asia-Pacific region, including New Zealand, China, and Australia, dominates the wool market,
with Australia being the leading global supplier known for its fine Merino wool production. The
growing demand for wool in the region, driven by eco-friendly and sustainable preferences of
The wool industry in New Zealand faces challenges related to animal health, veterinary chemicals,
and environmental standards. However, the industry strives for excellence and remains a significant
player in the global market. Digital platforms and e-commerce have become increasingly important,
especially during the COVID-19 pandemic, with WoolQ being a comprehensive digital platform for
Geopolitical events and the ongoing impact of the COVID-19 pandemic influence the wool market.
Despite these challenges, there is growing recognition of natural fibers' positive attributes, and the
wool market is expected to grow. Exporters in the wool industry must adhere to registered risk
Overall, the wool industry in New Zealand continues to evolve and adapt to market dynamics,
emphasizing quality, traceability, and sustainability to meet the demands of consumers and
international markets.
Recommendations
The report recommends the following strategies for a wool company in New Zealand:
Emphasize Quality and Traceability: In a market driven by consumer preferences for eco-friendly and
sustainable products, the wool company must highlight its superior quality and traceability.
Implement measures to ensure consistent quality standards throughout the production process and
invest in traceability systems that provide transparency to consumers about the origin and
Focus on Sustainability: With the increasing demand for sustainable products, position Merino wool
sheep farming, such as responsible land management, reduced chemical use, and animal welfare
Collaborate with the Ministry for Primary Industries (MPI): The MPI is vital in assisting exporters and
ensuring compliance with biosecurity regulations. Establish a strong partnership with the MPI to
leverage their expertise and support. Seek guidance on meeting overseas market requirements,
animal health regulations, and environmental standards. Collaboration with the MPI will help
Leverage Digital Platforms: In the era of digitalization, utilize digital platforms like WoolQ to
streamline operations, enhance efficiency, and meet the evolving needs of consumers. Explore
opportunities to connect directly with customers through e-commerce platforms, allowing them to
purchase wool products conveniently. Digital platforms can also provide market insights, facilitate
Target the Asia-Pacific Market: Given the dominance of the Asia-Pacific region in the global wool
market, particularly China and Australia, focus on expanding its presence in this market. Tailor the
marketing efforts to resonate with the region's eco-friendly and sustainable preferences of millennial
and Gen Z consumers. Collaborate with local partners, distributors, or retailers to establish a strong
Stay Resilient to Geopolitical Events and Pandemic Impact: As the wool market is influenced by
geopolitical events and the ongoing impact of the COVID-19 pandemic, it is essential to develop
strategies that enhance resilience. Diversify the export markets to reduce dependency on a single
region and stay updated with international trade regulations. Invest in flexible supply chain
By implementing these strategies, Merino wool company can position itself as a leader in quality,
traceability, and sustainability while capitalizing on the growing demand for eco-friendly products in
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