Farmers vote in favour of wool buyers WNZ and CPW merger

Wool prices have been depressed for several years. Photo / Hawke's Bay Today.

Wools of New Zealand (WNZ) and Primary Wool Co-operative (PWC) shareholders have approved a merger between WNZ and the PWC-owned CP Wool (CPW), making it the first major grower-owned consolidation of the industry in decades.

More than 99.7 per cent of WNZ shareholders and 100 per cent of PWC shareholders who voted supported the merger, which will see both companies become partners in a new entity called Wools of New Zealand LP.

The new organisation will combine the trading and operating businesses of WNZ and CPW.

The merged group will transact about one third of NZ's wool clip as well as exporting WNZ-branded wool and carpet.

"Growers have spoken and backed our vision to build one organisation with strength and scale to make a real difference to New Zealand's struggling wool industry," WNZ chair James Parsons said in a statement.

"We are very pleased with this positive result, which validates our strategy to consolidate the sector and better link the supply chain from the grower through to the consumer," he said .

"By combining operations, we can provide the scale, focus and shared vision to achieve better outcomes for our growers," he said.

By joining forces, he said, the parties stood a better chance of realising the full potential of wool, which has suffered very low prices for many years.

Richard Young, chair of PWC, said the result lays the foundations to deliver improved fortunes for the wool sector.

"This single grower-owned entity will help drive our shift from wool as a raw commodity to grower-owned and branded consumer wool products.

"Ultimately, the development of an integrated supply chain aims to improve returns for our growers," he said in a statement.

PWC held a special meeting on November 4 and WNZ on November 5. Over 53 per cent of WNZ's share capital and 41.5 per cent of PWC's share capital took part in the votes.

The WNZ and PWC boards expect to complete the transaction by November 30.

Since the 1980s the export price of strong wool has tanked from a high of around $10 a kg to around $2.50 now.

The Strong Wool Action says for the first time in 40 years the market conditions are optimistic for strong wool, a courser fibre than the likes of fine merino.

In the year ending June 2020, New Zealand exported 71,028 tonnes of clean strong wool at an average price of $2.27 a kg.

Lifting this back up to $10 a kg would transform the industry from a $200 million export industry to a nearly $750 million export, the group said in a recent report.