Frequently Asked Questions
What is TMC Pools?
TMC Pools is a partnership between you the wool producer, Broker and The Merino Company (TMC). The aim is to provide stable and sustainable returns for all wool producers participating. TMC are marketing and working to develop consistent demand and increased value for all pool wool through providing continuity of quality and supply to the customer and where appropriate, unique and innovative marketing and processing solutions.
How do the TMC Pools work?
Wool producers contract a percentage of a shearing to the TMC Merino Pool or the TMC X-Bred Pool for the 2010/2011 season. Once delivered into one of the pools the wool will be held in a separately funded entity called TMC Pools Pty Ltd managed by TMC. TMC then performs three key services to deliver value to TMC Pools’ woolgrowers.
1. Marketing
a) Relationships: Identify, initiate and build both commodity and non-commodity supply relationships with target retail brands and strategic manufacturing customers.
b) Marketing: Work with these customers assisting with marketing and brand building initiatives including “point of sale” promotion where applicable.
c) Innovation: Develop innovative quality product solutions and tailoring product requirements where necessary to meet the needs of the customer’s consumer base with wool from the pool.
2. Pool Management
TMC will use a variety of methods to sell Pool wool via marketing contracts with long term customers, commodity contracts, plus hedge products using derivatives such as futures or options, forward selling and optimally timed spot selling including at auction. In this role the Pool Manager acts as a fund manager.
3. Supply Chain Conversion
Managing and shortening the supply chain and engineering innovative quality product solutions.
For Wool Producers who are interested, when must contracts be signed?
The Pool year runs from 1 July 2010 to 30 June 2011 and a contract detailing the quantity, micron and month of delivery to broker must be signed and submitted to Broker by 31 July 2010. The contract volume is on net greasy kgs with an acceptable variance of 10% by volume on delivery.
What role does Broker have in TMC Pools?
Broker will perform its usual brokerage role including all wool receivals, wool handling, testing, storage as well as disbursement of the delivery payments and final Pool returns. Broker will liaise continually with TMC and provide timely feedback for all Pool participants. Broker will also act as an arbiter and ensure growers’ wool is assessed fairly according to AWEX types. Broker’ major role is to work with TMC to ensure positive returns for you the grower, and to work with you to advise ways to improve marketability of your clip through this program.
For example: Specific classing requirements for customers, EU Eco-label advice and Non-mulesed opportunities, On-farm accreditation and more.
Will Growers be informed of these marketing activities?
TMC Pools will regularly communicate with Pool participants to inform them of the financial performance of the Pool as well as updates on customer relationships and marketing initiatives. Information will be provided via regular newsletters, email snippets, through your wool representative and through the website (www.merinocompany.com).
Can I select which lines of wool to allocate to the Pools?
Selection of lines will be conducted by Broker in consultation with you. Lines will not be split. TMC will give Broker regular feedback on types in particular demand, to assist in selecting lots to allocate.
When will I receive payment?
You will receive a Delivery Payment based on 80% of the Pool Entry Value (PEV), within 28 days of the end of the month your wool was completely delivered to the broker woolstore. The Pool Entry Value (PEV) will be based on the most recent spot price Mainland grid available once your wool test results and types are complete. All funds from sales are held in the Pools bank account until finalisation.
The Final Payment will be made after the Pool closes on 30 June 2011 and by the end of September 2011, allowing three months to finalise all lots received into the Pool for that season. The Delivery Payment will be deducted from the Growers Pool Return, which is determined using the calculation as detailed in the Terms and Conditions of the contract.
Your brokerage and testing costs plus any shearing/cash advances will be deducted from the Delivery Payment and Broker may deduct any outstanding costs from the Net Growers Pool Return payment.
How is the Pool Entry Value (PEV) calculated?
On a weekly basis a mainland pricing grid is created which reflects the auction sales of the week. Broker reviews this grid and the resultant prices for your lots to ensure they are fair and accurate. From this price the 80% Delivery Payment is calculated. Your wool representative can explain in more detail about the timing of the Delivery Payment and the finalisation payment.
Have I any say as to price and time of sale for committed wool?
No, as the producer, you are having the sale, risk and final returns managed for you by the Pool Manager.
What are the other premium opportunities in the Pool?
As there is demand for wool with particular attributes, we are offering premiums to in the Pools for verified compliant lots. These premiums are applied on:
• EU Eco-label compliant lots (Merino Pool 1% and X-Bred Pool 2%),
• Ceased Mulesing (1%) and Never Mulesed (an additional 1% where the Producer has fully ceased the practice of Mulesing on the property(s)). Maximum of 2% for Never Mulesed.
• Farm Management Plan or EMS externally audited (3%).
All premiums must be accurately declared when received into the woolstore and supported by either a laboratory test (EU Eco-label), a Statutory Declaration (Mulesing status) or a certificate of compliance (FMP/EMS).
Talk to your wool representative about which Premiums may apply to you.
How is my return from the Pool calculated?
The percentage of a producer’s distribution from the Pool is calculated as detailed on the attached FAQ's document:
Each lot delivered into the pool has an AWEX type applied by Broker. This type is used to assess the price that lot would have achieved for each sale throughout the season. From these weekly prices the average season price is then calculated and to this any premiums are added.
For Example: for a verified EU Eco-label lot (1% premium) average season price of 585 gsy becomes 590 gsy
The value of each producer’s wool on a lot by lot basis is then totaled for the season. This amount is then expressed as a percentage of the total value of all producers’ wool in the Pool for the season.
This calculated percentage for each producer’s wool is then applied to the Net Pool Return for the season. The producer is then paid the amount corresponding to this percentage less the Delivery Payment and any outstanding costs incurred on your behalf.
