Sheep farmers are cautiously revisiting a wool levy as the industry reorganises and seeks clearer returns. Photo / Michael Craig
By Monique Steele of RNZ
New Zealand’s wool industry is looking to spin a sustainable future backed by farming from its farmers and industry.
Wool-producing farmers paid a wool levy for many years that helped promote the sector, build markets and fund research and development.
But dissatisfied sheep farmers voted to disestablish the governing New Zealand Wool Board and hence its levy in 2003.
Since then, industry groups have become fragmented and low profitability has entrenched a decline in the size of the national flock.
Subsequent attempts at reinstating the levy in that time have failed.
Wool Alliance was launched late last year as a not-for-profit: bringing together Wool Impact, Campaign for Wool, Wool Research of New Zealand (WRONZ), and Beef and Lamb New Zealand, with former-Fonterra chairman John Monaghan at the helm.
General manager Kara Biggs - ex-Campaign for Wool - told the primary production select committee on Thursday that it was hoping to secure one-third of its required funding from industry, and another third from farmers in the future.
She said industry’s funding contribution would be voluntary, as commodity levies could only apply to producers.
“Coming back to growers, yes is the short answer, we are looking to run a levy campaign, and it would sit under the Commodity Levies Act,” she said.
“So the work that we’re doing at the moment is trying to figure out exactly how much funding comes from each.”
Biggs said based on its calculations, it was working with a proposal of about 2-3 cents per kilogram, and was asking a selection of growers about their possible contribution threshold.
“What we’re looking for is a different model where we actually enable the current players to be more profitable with what they’re already doing, rather than kind of trying to take control and trying to sort of do it all ourselves,” she said.
“I think that would really feel like another Wool Board 2.0.”
Biggs said a single-desk model like Zespri’s would be expensive to set up and could exacerbate some of their current challenges.
Most of New Zealand’s large primary producers pay levies, including horticulturalists, growers and farmers across dairy, red meat, arable, poultry and eggs.
An anonymous Central North Island shearing contractor said ending levies ceased seed funding for training and qualifications programmes for shearers, which was now a user-pays model.
Federated Farmers’ meat and wool council chairman Richard Dawkins said farmers voted out the NZ Wool Board because they were dissatisfied with the return on investment for their levy.
He said any new levy would need to be transparent and accountable for farmers’ financial contribution.
“There is majority support of the idea of a levy. You know, farmers are keen to invest in this industry,” he said.
“While there is that support, we would like to see significant transparency, understanding and real measurables on that return on investment.”
He said more than half its members supported the idea of bringing back a levy.
“What farmers are really looking for is just a significant return on investment for their levy, we just don’t want to re-invent the wheel and go round in circles.
“We actually need to see outcomes from our investment.”
Dawkins said the sector organisations had become quite siloed, and it made sense to bring them together.
After many tough years for sheep farmers, strong wool prices were rebounding and just hit a 10-year high this month.
The Fusca platform’s strong wool indicator increased 130% compared to 2022 levels at $5.46 per kg, with prices reaching $5.80/kg in recent North Island wool auctions.
Also speaking at the select committee, Wool Impact chief executive Andy Caughey said that meant an extra $200 million a year was coming directly into rural communities.
“From a government’s point of view, your $4.5m investment in Wool Impact is looking like a good return on investment,” he said.
Caughey said brands were drivers of demand and manufacturers could no longer access the supply of wool they used to, creating a good opportunity for New Zealand wool, now that growers were profitable again.
“Now is the time for us to bring the two parties together and look at what we can do to use this as an opportunity to solidify the price point that we’ve got, and use it as a platform for price stability so we can maintain sheep in our communities.”
Wool Impact received Government and industry funding to improve demand for New Zealand wool by encouraging new supply deals with manufacturers, and awaited further guidance on any future funding, but would be rolled into the new Wool Alliance.
Major wool broker PGG Wrightson ended its Napier sale after 140 years last month, and will launch its national wool auction system in Christchurch this week.
It could still be some time before a levy would come into force, until the next Commodity Levy Order could be made.
- RNZ