Farmers' wool levy to be clipped

The Wool Board is cutting its farmer levies from 5 per cent to 2 per cent from July 1.

Board chairman Bruce Munro's announcement follows industry criticism of the board's handling of its restructuring.

Mr Munro said farmers would be aware that the McKinsey report recommended a 1 per cent levy on wool sales, provided the meat industry contributed proportionally to on-farm research costs.

"Unfortunately, we have been unable to reach an agreement with the Meat Board on proportional funding," he said.

But the two boards were "some way down the track" of merging their respective on-farm research and related programmes.

"Despite not having reached finality on this, we are still able to deliver a much-reduced levy," said Mr Munro.

He said a portion of the reduced levy was necessary to meet the Wool Board's operating costs.

He foresaw a further cut in the levy once the wool industry reform had been completed and the board itself was disestablished.

"Our aim is to also have the legislation necessary to allow the disestablishment of the Wool Board passed before the end of our next financial year."

Mr Munro also announced that the board had put its $10 million Wellington headquarters, Wool House, in Featherston St, up for sale.

The board talked in 1997 about selling its headquarters, after spending $450,000 upgrading the building to prepare it for sale.

Its office space in the building was reduced from four floors to two and space in the building was rented to the Meat Board.

Mr Munro said the board was also repatriating funds held overseas as part of its disestablishment process.

The Wool Board's reserves, $133.2 million in 1996, were whittled down to include a $99.8 million "investment portfolio" by late 1999 after part of the reserves were used to finance a three-year programme to establish its Fernmark branding through Wools of New Zealand.

Wool Board chief executive Mark O'Grady has said the $116 million left in reserves included $90 million in cash reserves.

The remainder was invested in New Zealand and abroad.

Mr Munro said the board was proceeding well in terms of the overall wool industry reform process.

"It remains our objective to have all the new entities up and running by July 1.

"It is important that we do so if the move from levy-funded promotion of all New Zealand down to the commercial structures proposed by McKinsey is to be accomplished in as seamless a manner as possible," he said.

The board has said the business plan for the proposed "Strong Wools New Zealand" will be distributed to growers this month.

A separate proposal for fine wools, in which Merino farmers' share of Wool Board reserves is expected to be used as start-up capital for a marketing company, is expected to be voted on by Merino farmers by next week.

- NZPA