Elders tries to tie up wool deal

The battle for exclusive wool supply deals is heating up. Photo / Herald on Sunday

Rural services company Elders has launched a fresh attack in the battle for exclusive wool supply deals with a new drive to sign farmers up.

Elders Primary Wool, a 50/50 joint venture between Elders and the farmer-owned Primary Wool Co-operative, unveiled its new luxury wool brand Just Shorn earlier in the year and now wants to build the initiative by getting more growers to supply it directly.

The plan is to increase returns to farmers by marketing Just Shorn as a high-end sustainable carpet fibre to affluent overseas consumers.

Rival wool marketing company Wool Partners International has also launched a sustainable wool brand, Laneve, with similar plans to persuade farmers to supply it exclusively.

WPI has yet to put out a prospectus detailing its offer to farmers.

Both companies will officially launch their brands at a major flooring expo in Las Vegas in February.

Primary Wool Co-operative has around 900 farmer shareholders and aims to more than double that by the end of the year.

There are 12,000 commercial sheep farmers in New Zealand.

Board member Howie Gardner said the co-operative wanted to build up rapidly to gain critical mass.

"We've invested one hell of a lot of money in the development of this brand and we're looking to increase our membership to carry the load a little bit for us."

The campaign for members was being driven by Elders Primary Wool agents, targeting clients who were not members of the co-op, he said.

Farmers can purchase up to one share for every 5kg of wool they trade in a year or they can make a minimum upfront investment of $500 which is then rebated to them at a rate of 3c per kg of wool traded.

Gardner said farmers were "quite rightly confused" by the two rival initiatives, with many not understanding why Elders and WPI could not work together. But they had a choice. WPI has said it is interested in trying to co-ordinate with Elders.

Mike Pedersen, chairman of Meat and Wool New Zealand, said the real battle to raise languishing wool prices was in overseas markets.

"The big issue is we have got WPI and Elders still fighting it out on the ground here in New Zealand."

He did not believe farmers would be rushing to sign up to anything until they saw better returns or at least the promise of better returns.

Meat and Wool had been trying to bring the two sides together, he said, but with farmers' vote in September to discontinue paying the wool levy those efforts would stop.