Transtasman wool auction shift draws more criticism

Pyne Gould Guinness has joined the chorus of criticism against the New Zealand Merino Company's decision to move its wool auction to Melbourne.

PGG chief executive Hugh Martyn said the move had little commercial value and added his company would be staying put in Christchurch.

NZM will sell wool at the Melbourne auction every three weeks from next month. It said it was forced to leave by New Zealand's reduced buying bench and the superior buying power in Australia.

Martyn said he found no evidence that better prices would be obtained across the Tasman. A shift by PGG to Australia would be bad for merino farmers and the wool industry in New Zealand.

"We are not trying to personalise it - they have made their own commercial decision and it simply sits that we have not agreed with their commercial decision," he said.

"Time will tell which one of us is proven to be correct."

Martyn said New Zealand's merino prices were consistently up to 5 per cent better than Australia's during the August to February selling season.

PGG believes that last season's prices and the buying strength of the auction bench justified its decision to remain in New Zealand.

The New Zealand Council of Wool Exporters last week criticised NZM's shift with a full-page advertisement in the Press, accusing NZM of devaluing the merino product. Relationships have since soured, with NZM now heading to court over the advertisement.

NZM chairman Peter Townsend said the merino company was pursuing legal action against the council.

He said he was dismayed by inaccuracies in the advertisement.


Australia's bigger-buying bench would not necessarily lead to better returns for merino farmers, said Christchurch wool exporter Don Maginness, who is not a member of the wool exporters council.

Buyers would still have to ship the wool from New Zealand without having access to the remaining merino clip or other wool types to fill a container, he said.

Maginness said the main buyers in Australia would likely be companies already represented in New Zealand and which could deal with shipping problems.

A veteran of 40 years in the wool-exporting industry, Maginness predicts that the merino wool identity and its reputation would be lost in the mass of Australian wool.

"The decision to move seems to be based on last season's trading conditions, and as we all know, the market can be changed quickly by factors outside the textile industry."

Mr Martyn said the shift by NZM may affect the wool roster for the Christchurch auction.

He said wool auctions during the traditional merino selling period may have to be reduced to every three weeks.

- NZPA