The nation's biggest deer velvet cooperative is calling for deer farmers to "vote" for market reform this season by putting their velvet through its operation.
"Only by increasing our market share, can we make the changes that are so desperately needed," Velexco Co-operative Group chairman James Guild said.
He made the call after rural services giant PGG Wrightson failed to take control of Velexco and much of the nation's deer velvet exports.
Mr Guild said today negotiations with PGG Wrightson began in May to form a joint venture handling more than 70 percent of the velvet produced on New Zealand farms, but failed.
The joint venture would also have included private company Tasman Velvet Processors.
When the talks failed, Velexco offered to buy out PGG Wrightson's own velvet business, by taking out a bank loan guaranteed by Velexco's farmer shareholders.
As part of the deal, PGG Wrightson would have taken a 20 percent shareholding in the co-operative and contracted farm collection services to Velexco.
Agreement was reached on price and structure, but Mr Guild said PGG Wrightson baulked at being a shareholder in a potentially under-capitalised venture, and insisted that the purchase be funded entirely by equity.
"This was clearly impractical given the time available, the number of shareholders involved and uncertainty as to what was actually being purchased," Mr Guild said.
"With the velvet season nearly upon us, we had to cease negotiations."
Velvet producers were disappointed that the latest attempts to reform velvet sales and marketing had failed, Mr Guild said.
The cooperative was now working on arrangements for the new velvet season, and saw it as an opportunity to re-group for another reform effort in the future.
All parties recognised the need for marketing reform and each now understood the stance of their rivals, which could provide a basis for further negotiations.
"By building Velexco's volumes farmers will strengthen the co-operative's hand in any future negotiations with PGG Wrightson or other market participants," Mr Guild said.
The current marketing system was a classic commodity trading model, with wild price fluctuations between seasons and no connection between producer and consumer.
Deer farmers are emerging from five years of low returns for venison, but prices heading well above $9 a kilogram this season, have prompted speculation of another boom and bust.
Ground antler velvet has been claimed by both traditional healers and modern-day marketers to help lower blood pressure, build muscle, and reduced arthritis pain.
Velvet antler capsules are sold for about $NZ100 for a bottle of 120 capsules in the United States, but New Zealand's main market are Asian buyers purchasing for traditional markets in Korea and China.
