'Easy to write off wool'

By Philippa Stevenson

Declining wool prices have reduced on-farm profitability to such an extent that it would be easy to write off the wool industry, says the Wool Board chief executive, Jeff Jackson.

His comments in the board's annual report released on Friday - just a week after he announced his resignation - are among many in the document which make for grim reading.

In the 1998-99 year fine wool prices were down 30 per cent, the average price for mid-micron wools was down 22 per cent, and only crossbred wools held steady. Crossbreds were up 2 per cent on the previous season because of the demand for carpet wools from Australia and the buoyant US market.

The prices echoed international trends for all fibres - wool, cotton and synthetic - which were declining at a rate of around 3 per cent a year.

The board chairman, Bruce Munro, said that in the textile industry, new fibres offering new technology were appearing almost monthly.

"It is sobering to reflect that at the beginning of the 1990s there were about 50 branded synthetic fibres in the European apparel market. Today there are 150, each aggressively promoted by its producer, each offering a unique benefit or range of benefits to manufacturers and, ultimately, to consumers."

In the carpet sector, competition from new synthetic fibres was less formidable but major technical advances meant that production volumes were huge and the promotional power of fibre companies had strengthened.

Mr Munro said the New Zealand industry had to chart a new path.

"The focus to date has predominantly been on defining the problem with growing and selling wool rather than looking for sustainable, strategic solutions to these problems."

Mr Jackson said that biotechnology had the most potential to add value to the sheep industry, particularly in productivity and growing wool with marketable attributes.

However, because that technology would take time to deliver, "action being taken to improve the efficiency and effectiveness of the Wool Board's activities is the first stage of a value-adding programme that is directed at improving the ongoing returns for New Zealand wool and on-farm profitability."

The board has appointed consultants McKinsey and Co to make a proposal for a strategic plan to improve grower profitability, but the idea, expected to cost up to $2 million, has yet to run the gambit of the board's annual meeting.

A Te Kuiti farmer, Bill Woolston, has tabled a remit calling for the project to be abandoned while the board's future is still to be determined by growers and the Government.

He questioned the independence of the study and said there was "no magic formula awaiting discovery by some consultant who has no industry knowledge."

At the launch of the annual report, Mr Munro said an independent steering committee would be established to oversee the project and the board was "not interested in the self-justification route."

The board had accepted that an outcome of the project may be that there was no future for it in its present form, or in a similar structure.

However, more than ever before, farmers needed to act collectively. "We are working on the basis that the industry study ... will show a need for the board; so it is appropriate to carry on."