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A new door opened

CHRIS Kelly grew up on his parent’s farm at Macarthur.

It is a moderate sized farm which used to have around 40 milking cows, a few pigs and corriedale sheep – later changing to a merino cross as the market for merino wool improved. 

At the completion of his schooling at Monivae College in Hamilton, Chris applied for Longerenong Agricultural College.

Like all good plans – some things change along the way and Chris took a gap year and worked on his uncle’s sheep farm at Tatyoon.

It was during this time that Chris decided to go to Geelong Technical College and study wool classing.

It was still Chris’s intention to head home to the family farm and work there and around the district as a classer. 

Again, plans changed after graduating as a wool classer, when Chris was offered a position with a large Japanese wool trading company to operate out of Melbourne in 1985. 

As anyone in the sheep and wool trade knows, it’s been a roller coaster of a ride in this industry over the last 30 years. 

It would be fair to say that Chris has been at the pointy end of the carriage through it all. 

Such was the volatility of the global markets, that in 2007 there was a huge withdrawal of companies, particularly Japanese companies, removing wool from their export commodity trading list. 

So now, after 22 years in the wool trading industry, Chris found himself unemployed. 

One door close’s … So, what to do now?

Chris had been working alongside colleague, James Thomson, for most of his years in the wool trading business – together they decided to use all their expertise and join forces to establish their own wool trading company – a task, much easier said than done.  

Chris explained it was an enormous gamble – “we were unemployed – we either had to turn right or left”, – meaning they had to gain employment elsewhere or back themselves in, and start in the industry that so many big players had left. 

Instead of looking at what they didn’t have, Chris and James looked at all the experience and expertise they could offer – having ridden huge highs and huge lows – and the impact of the Global Financial Crisis was still in play. 

Firstly, financial backing was required. 

Not all banks saw this as the right time or right move.

Persistence paid off - as it turns out, the timing of their business plan integrated perfectly with a bank wanting to extend business into the Asian market.

Australian Merino Exports (AME) was born.

The task of filling orders from China, Italy and other destinations are one thing but the logistics of buying the wool, consolidating the order, packaging and global shipping are quite another.

Chris and James have been very fortunate to have employed staff with enormous experience in logistics allowing them to focus building and supplying their markets. 

A hands-on approach is what this company is all about.

It should be stated that although the name of the business says ‘Merino,’ it is not restricted or limited to purely merino wool – crossbred wool forming a large part of their markets. 

Tasmania is also playing a large part in AME – it has a share in a Tasmanian company - ‘Wool Solutions’ and the ‘Clean, Green and Environmentally Friendly’ ethos is a big selling point in the Chinese and Italian markets. 

As for ‘non-mulesed’ wool – Chris said they could see the writing on the wall about six years ago – that provenance and non-mulesed wool from clean, green environments was at the forefront of the purchasers mindset  – “like it or not, that is what the future of the industry looks like.” 

Chris explained that as an Australian Wool Industry, we are competing with South Africa, New Zealand and Argentina – who don’t mules. 

As a country, we are currently around 14 per cent non-mulesed – which given that the current trends look to be strengthening – then to remain mulesing will leave a producer with a significantly smaller market in which to sell their wool.

There are just many more opportunities for non-mulesed wool. 

Chris said that the market for non-mulesed wool is increasingly dictated in orders they receive from buyers. 

“There is an abundance of 16-17-micron wool now but that would have been hard to believe 35 years ago – when we were hunting around trying to get a bale of 15.5-micron wool – but we can buy 12-micron wool now,” he said.

“It’s amazing over that time how things have changed.

“For the Chinese market – their bread and butter range are 19.5 – 21-micron merino but it’s all dictated by fashion trends.”

Its particularly interesting to talk staple length with Chris, because some farms are staggering their shearing now by shearing at around 10 months and some as early as six months – but according to Chris a staple length needs to be at least 65mm – anything shorter may be penalised.

The best mills in Italy want a staple length of between 65-90mm but in Australia, we tend to grow ours longer – either through genetics or environmental conditions – for the producer though – it’s still more weight in the bale. 

As for markets – Chris and James are continually trying to predict what will happen and they base their buying strategies on that.

As AME buys to fill orders and also has forward orders – they can source wool in advance of an order and stock wool if they think the market will rise – like everything in the agriculture industry – there is always a gamble – ‘sell or hold’ – and sometimes they get it wrong. 

For Chris there has been about four big events during his 35 years – and they seem to happen around every eight to 10years – the stockpile crisis, or the Global Financial Crisis, the SARS Virus and now the very topical Corona Virus.

Chris also mentioned that finance companies are much better informed now on global markets and are getting better at working with and alongside business and riding the bumps. 

Australia’s drought has had a huge impact on numbers and thus supply – and will take an enormous amount of time for numbers and genetics to recover – rain is simply not an overnight fix.

AME has developed a Traceability app – which can be downloaded and the producer can lock into it and see where their wool is in the supply chain. 

As the wool is tested, the grower can have instant access to the results via the app. 

Similarly, the end user or purchaser can use it to see where the wool was produced. 

Some companies have now gone so far as to be running audio visual productions in their showrooms and stores to show the consumer the whole supply chain link – and this is becoming an important tool to the environmentally conscious consumer – which are exponentially growing in number. 

There is also a growing connection between the producer and the manufacturer – AME has facilitated these meetings. 

As for story-telling, the Hamilton Lambswool brand wool is sourced exclusively in the Hamilton area by AME and manufactured into garments in Japan.

These garments tell the Hamilton story of quality wool production.

Mike Kuritani – a Japanese consumer described these garments as “Hamilton Lambswool character is super-soft, bright, drapey, cashmere-like handle which comes from good climate, rich pasture and high-quality milk of nutrition from mother sheep”.

“For those who once wear the garments, Hamilton Lambswool always becomes part of their lifestyle,” Mr Kuritani said.

From AME inception, the business has now grown to an annual turnover of in-excess of $200 million per year and has exported more than 13 million kilograms of wool, but the most important aspect of the business – according to Chris – is the relationships they build.

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