Major strong wool bodies in formal talks on combining forces

A call has been made for the wool industry to collaborate to get better returns for farmers. Photo / Stephen Jaquiery

Primary Wool Co-operative and Wools of New Zealand are in formal discussions about combining operations.

In a statement, WONZ chairman James Parsons said bringing together two like-minded grower organisations would be an important first step in rejuvenating "a relatively dire" current economic situation for wool.

In July, the Wool Industry Project Action Group — charged with looking at opportunities to improve returns for the beleaguered crossbred wool sector — released a report saying a new approach was needed.

The group's recommendations focused on identifying opportunities for players in the strong wool sector to invest and work together to target high-value consumers and end users, while simultaneously getting the sector "match fit" by addressing the issues that had manifested due to a sustained lack of investment.

Parsons said now, more than ever, the wool industry must collaborate to get better financial results for farmers.

Collectively, the shareholders of WONZ and Primary Wool Co-operative, along with other farmers supplying PWC's joint venture Carrfields Primary Wool, produced more than a third of New Zealand's strong wool clip.

Primary Wool Co-operative was formed in 1974 by a group of Hawke's Bay farmers and membership had grown to more than 1400 throughout New Zealand.

Wools of New Zealand had 730 grower shareholders representing about 14.5 million kg of annual strong wool production.

"Combining with PWC ... will mean we can achieve scale, reinvent the supply chain and improve efficiencies, enabled by the increased volume, brands and exporting focus WONZ brings to the table," Parsons said.

PWC chairman Hamish de Lautour said the stronger entity must focus on marketing and extracting value from products made of wool and not just trading wool as a commodity, if wool was to capitalise on its "rightful place as the sustainable fibre of choice for consumers".

Parsons said WONZ and PWC envisaged a lean, simple commercial structure that delivered the opportunity for other grower groups and new grower shareholders to join.

While combining operations would take time due to the nature of the company structures, there was a strong commitment from both that it was "a prize worth pursuing", he said.

Meanwhile, PGG Wrightson Wool's South Island team said last week's wool sale in Christchurch was "remarkable for all the wrong reasons" after experiencing the most dramatic price fall seen in more than a generation for mid micron wools, which were 22 per cent to 30 per cent cheaper.

Interestingly, the finer merino and crossbred wools, while cheaper compared with the previous sale, saw more action competition from the bench and resulted in a higher clearing rate. Crossbred fleece (31 to 40 micron) was 5 per cent cheaper.

The effects of Covid-19 continued to severely affect discretionary consumer spending in traditional markets, it said.