Wool co-ops in talks to make industry more close-knit

Jeff Grant. Photo / Supplied

In a rare sign of unity in the wool industry the directors of two farmer co-operatives have met to discuss a possible future together.

Elders-aligned Primary Wool Co-operative, and Wool Grower Holdings, which has partnered with PGG Wrightson, met this month to look at a better operating model for the fragmented wool sector.

PWC, with about 900 grower members, has formed a joint venture with rural services company Elders to relaunch New Zealand wool under the Just Shorn consumer brand.

Wool Grower Holdings has joined with competing rural services firm PGG Wrightson to form Wool Partners International, a marketing company which likewise plans to sell the fibre under the Laneve brand.

With wool prices languishing at unsustainable levels it is agreed that the sector must reposition New Zealand wool as a luxury, renewable fibre to command a higher export value.

But it is also seen as less than ideal that two competing New Zealand brands are launching the concept on the world stage.

Against this background PWC chairman Bay de Lautour said he had asked the directors of both co-operatives to meet.

He didn't want to raise expectations but there had been some positive discussions.

"Hopefully around the table at this end there will be a realisation that for the good of farmers we've got to be united here."

At the moment overseas carpet manufacturers were being talked at from two sides, he said.

Wool Grower Holdings chairman Jeff Grant said the two groups planned to meet again next month.

They were a long way from the point of discussing a merger, but all options were on the table.

The common ground between them was the low wool price. "The reality is that the price currently received by farmers, and in many respects right through the chain for strong wool, is unsustainable. The status quo ... is not a model that is in the best interests of agriculture going forward."

Wool Grower Holdings intends to go out to farmers next year with a prospectus offering them membership of the co-op.

PWC has already started a campaign to gain more farmer shareholders and plans to double in size.

Both are seeking exclusive wool supply deals with farmers with the aim of unifying the wool clip and selling directly to overseas customers, thereby controlling the process and cutting costs.