An Indian textile processor is exploring closer commercial links with New Zealand wool growers as volatility in the fibre market increases pressure on manufacturers to secure supplies and manage costs.
Sumeet Nath, managing partner of Raj Group, told Farmers Weekly New Zealand that the company sees scope for a more direct relationship with producers. Raj Group receives two to three containers of New Zealand wool each month and uses the fibre at one of its dozen processing plants.
The company supplies carpets, rugs and cushions to more than 250 accounts across 70 countries. Its customers include some of the world’s largest big-box retailers. The business is Fair Trade certified and has factories in Panipat, where it is described as a standard-setting operator for staff working conditions.
Long supply chains add to price risk
International wool processors have faced unsettled prices during the past 18 months, according to the report. Nath said the distance between New Zealand and India creates a lengthy ordering and production cycle, making continuity of supply an important consideration for manufacturers.
“You must remember, the supply line from NZ is very long. We are looking at 75-80 days from ordering to final production of a product. Anything that can reduce that, and improve continuity is always welcome.”
Lokesh Misra, Wools of NZ’s representative in India, said the organisation was working towards longer-term supply arrangements. The proposed contracts would fix the price for four months, reducing processors’ exposure to individual auction price points during that period.
Possible changes to procurement
Nath also identified collective supply by New Zealand farmers as one possible way to provide processors with larger volumes through Wools of NZ. Holding wool inventory in India was another option discussed, with the aim of shortening the time between ordering and production.
| Supply issue | Detail reported |
|---|---|
| Current deliveries | Two to three containers of New Zealand wool per month |
| Ordering to final production | 75-80 days |
| Proposed contract period | Four months of price certainty |
| Potential stockholding | Wool inventory held in India |
The proposals reflect the financial and logistical pressures faced by processors buying wool across long international supply routes. Nath said reducing lead times could support demand for wool while improving processors’ liquidity by limiting the amount of money tied up in materials ordered well ahead of production.
For growers, the discussion centres on whether more co-ordinated supply and forward contracting can provide greater certainty than reliance on short-term auction purchases. No new contract, price or volume commitment was announced in the report, but Wools of NZ’s work indicates that processors and suppliers are examining alternatives to buying solely at individual auction points.
