Spinning wool a better premium

Merino fibre represents approximately 4 per cent of New Zealand wool production.

Merino New Zealand's net operating revenue is $3.3 million.

Before it was established, there was little promotion or differentiation of New Zealand merino wool, which traded at a discount to Australian merino.

The trend has now been reversed, and Australia is one of the international competitors which are putting in place structures modelled on the Merino NZ example.

A premium of up to 6.7 per cent is being paid for the colour and manufacturing performance of New Zealand merino.

Merino Ltd aims to increase this premium to nearly 25 per cent.

Other business targets:

* Increase its share of the domestic merino market from 69 per cent to 75 per cent (from 49,000 to 62,000 bales) within five years.

* Increase its net operating revenue to $5.9 million.

* Lift farm profitability by a minimum of 6 per cent a year.

* Achieve a pre-tax return on capital employed of 40 per cent within five years.