New ventures aim to turn around sick wool industry

Wool Partners International hits the road today hoping to convince farmers to back its plan to turn the struggling industry around.

Chief executive Iain Abercrombie said New Zealand made 30 per cent of the strong wool traded worldwide and the price per kilo had nearly halved during the past 20 years.

"Clearly there's an unacceptable return to wool growers and that has been the case for some time," he said.

NZ Wool Services International last week said auction prices had been hit by an increase in the value of the dollar, although in overseas currency most types had been firm or increased by up to 2.5 per cent.

For some farmers wool is becoming a byproduct and shearing an animal health exercise. Sheep numbers fell 11 per cent to 34 million in the year to June, with wool exports down 4.6 per cent to 136,909 tonnes.

Wool Partners International was launched last July, combining the wool operations of PGG Wrightson with a new farmer co-operative, Wool Grower Holdings.

The company's guiding principles were to unify growers, consolidate the clip, collaborate with the industry and innovate in the market, with strategic initiatives of an integrated supply chain, establishing a means for growers to collectivise and to develop the best marketing structure for strong wool, Abercrombie said.

"Thhe primary objective of this roadshow is to encourage the farmers to see this as an opportunity for them to effect change and the first step of that is by putting their wool through Wool Partners International," he said. "We're looking at trying to exact better prices from today but I think when you're talking 130 million kilos of wool it's going to take probably a three-year period to get everything in place to start getting strong sustainable price increases for wool."

Wool Partners hopes farmers will own half the company through Wool Grower Holdings, depending on how many choose to buy shares in the co-operative, and hold 60 per cent of the voting rights.

A prospectus for Wool Grower Holdings would be issued in the next two or three months and farmer ownership would not be limited to 50 per cent, Abercrombie said.

Agriculture Minister David Carter - who farms sheep, cattle and deer - said Wool Partners was not a silver bullet but the best option available. The company was trying to get supply commitment and the prospectus would ask farmers to leave some returns from the clip to build up a shareholding.

"I'm going to do that, personally I think it's better than where we are at the moment," he said.

Elders Rural Holdings has launched Wool Marketing Enterprises and signed a deal with major US carpet retailer CCA Global Partners to supply it directly with strong wool, with a goal of increasing returns to farmers.

Elders said it had created a simplified, more effective path to market using its procurement network, export expertise and with grower involvement through Primary Wool Co-operative.

Abercrombie said there was room for both companies in the market.

FALLING FLOCK

* Sheep numbers fell 11 per cent to 34 million in the year to last June.
* Wool exports down 4.6 per cent to 136,909 tonnes.