Fran O'Sullivan: Wool levy rejected by 57

Wool is a stagnating industry and sheep farmers are concentrating more on meat production.

Farmers say no to raising $5 million for R&D, keeping focus on meat and holding on to any spare cash

Debate over whether to reintroduce a wool levy to fund a representative body for wool growers has hit a brick wall.

Last week wool-producing sheep farmers voted against a proposal to reintroduce a levy to fund a representative wool industry body.

The No Vote follows a significant campaign by the Wool Levy Group, which believes that farmers have paid a high price since losing their representative voice - missing out on chances to capitalise on market opportunities, research and development, productivity and promotion.

It will come as a major blow to the Wool Levy Group that a convincing 57 per cent of farmers voted against the initiative.

When the levy was abolished in 2009 it was primarily because too many farmers felt that they weren't getting value from their contribution towards funding Meat & Wool New Zealand.

After the wool growers rejected the levy, the organization was rebranded as Beef + Lamb New Zealand, effectively dissolving any affiliation it had with wool production.

Five years on, farmers have voted to maintain the status quo with 47 per cent of all of those eligible turning out to cast their vote - a substantial increase from the last referendum which drew only 39 per cent.

That is a large proportion considering many eligible will not vote as their wool is merely a by-product of their meat production and relatively insignificant.

But the strong turnout and the fact that 40 per cent voted to reintroduce the levy shows that there is a significant portion of the sector prepared to collaborate.

But the lack of industry wide support means they'll have to go back to the drawing board on what shape that could potentially take if they want to get an industry body up again.

It's more likely that we'll see a continuation of farmers getting behind some of the major commercial operations and players in the industry - committing their wool to the likes of Elders Primary Wools, Just Shorn and Wools of NZ.

The proposed levy would have netted about $4.7 million for the promotion and research of wool - the bulk of which was slated for the "education and promotion" of wool.

While some of the ideas touted and programmes to be enacted sounded great in principle, the substance and evidence of value to be derived was notably absent.

Former finance minister Ruth Richardson has been especially vocal in her opposition to the re-introduction of the levy. She said that the idea was outdated and was missing the point with solutions which were "not going to move the needle".

"Let's concentrate on the real R&D prize which is to make better use of the $1.5 billion of taxpayers' money currently invested in science by the government of the day. If ever there was an R&D tree to be shaken by agriculture it is that expenditure."

The Wool Levy Group has argued that the promotion and advocacy at an industry level was necessary if New Zealand wool was to become strong once again.

But the bottom line is that farmers don't agree and they've voted with their feet in numbers - opting to keep one of the few costs they can control off the books.

The potential for the industry probably more realistically lies in securing improved market access and reducing trade barriers for wool exports.

Having a representative at the negotiation table might not have hurt - but the present Government's track record has been strong with trade talks - and the $500,000 set aside doesn't buy a heck of a lot of advocacy.

In the face of uncertainty with stagnant global wool prices and a fluctuating New Zealand dollar, it appears that for wool producers in the foreseeable future - frugal is the name of the game.

• Fran O'Sullivan is a business columnist for the NZ Herald and Alexander Speirs (right) is a business journalist for Herald Business Reports