Failing wool sector imperils NZ sheep industry: taskforce

Concerted effort and commitment from the wool and textiles sector is needed to salvage the nation's sheep industry, according to the latest wool taskforce.

"The perilous state of the wool sector is placing the future of sheep farming in New Zealand at risk," the taskforce warned today.

Generic promotion could not solve the problems, and the industry needed to develop entirely new products, uses and markets for strong wool.

The taskforce said in its 24-page report there is still a potential future for the coarse wools which make up most of the nation's clip, because affluent consumers increasingly demand products that meet new standards in terms of sustainability, ethical production, social responsibility and environmentally-sound production.

But the taskforce - announced last year to foster growth in the wool industry after Agriculture Minister David Carter expressed concern about sheep farmers shooting themselves in the foot by axing industry levies - warned today that there was no silver bullet for restoring profitability.

Headed by Jeff Grant, a former National Party MP, former chairman of Meat and Wool and the New Zealand Meat Board, and a former Landcorp director, the taskforce said today that addressing the sustained decline in prices and volumes of wool exported from New Zealand over the last four decades posed a "real and immediate" challenge.

If sustainably-farmed New Zealand wool could be combined with the right products and brands, in the right markets, with the right retailers and final producers, "there is an opportunity to restore profitability to wool growing and enhance ... sheep farming".

Raising demand for wool products would require a "transformation" in the way that the sector interacts with manufacturers and consumers, and this transformation should be the long-term goal of the sector.

The taskforce today skirted politically sensitive issues such as who got what wrong in the industry.

"Market forces prevail and commercial entities make commercial decisions," the report said.

The taskforce was so guarded it declared "inappropriate" any specific recommendations on commercial arrangements "given the positions and commercial roles of the taskforce members in the wool sector".

Other taskforce members included New Zealand Merino Company chief executive John Brakenridge, Meat and Wool chief executive Scott Champion, director of Primary Wool Co-operative Ltd and Textiles New Zealand Cliff Heath, carpetmaker Cavalier Corporation chief executive Colin McKenzie, AgResearch chairman Sam Robinson and Keith Sutton, a director of Wool Partners International and Wool Grower Holdings.

Instead, the taskforce called for "one voice" for the industry and made observations and recommendations drawn from three underlying principles:

* Boosting demand, rather than supply (even though it said "structural commercial solutions to address the challenges of the wool sector is tempting").

* Lifting demand for wool by lifting demand for the products made from wool, best done by partnering with companies that understand consumers and consumer markets.

* Investment across the wool supply chain, with farmers, processors, and outside investors considering whether their investments will support a strategic plan to raise demand for wool products made from wool, as well as reward them for their investment.

The report also included a set of themes over three time horizons the taskforce said wool farmers, merchants, scourers, exporters, spinners, tufters, weavers, wholesalers and retailers could look to as a possible route to achieving a goal of lifting demand for New Zealand wool.

In the immediate-term the industry needed to play the game harder -- become as efficient as possible and drive improvements in the supply chain.

Over the medium-term it needed to change the rules, identifying lead markets and projects that contribute to gaining new positions in those markets, and, long term, it needed new products, uses and markets for coarse or strong wools.

Investment is particularly needed in retail brands focusing on products, customers and retailers - rather than supply mechanisms - and retailers need to be "educated" on choose wool and specifically New Zealand wool.

Research and development projects such as life-cycle analysis or the health benefits of strong wool needed to still be supported, despite the farmers' decision to axe levies for research, but the research into new products, processes, customers and markets needed to be funded by commercial companies "leveraging government funding".