It's all up to you, wool growers told

Wools of New Zealand chairman Mark Shadbolt says the industry has to get out of the "bargain-basement price bracket". Photo supplied.
Wools of New Zealand chairman Mark Shadbolt says the industry has to get out of the "bargain-basement price bracket". Photo supplied.
Returns of $3/kg for strong wool are unsustainable, both for farmers and the sheep industry - and it is up to farmers to change the situation, Wools of New Zealand chairman Mark Shadbolt says.

Mr Shadbolt was addressing a road show in Waimate yesterday, where he outlined the sales and marketing company's capital-raising.

Strong wool growers have been asked to subscribe for shares at a ratio of one share for every 2kg of their annual strong wool production, with a minimum subscription of 5000 shares at $1 per share.

The company's objective was to raise $10 million, although the offer would proceed with a minimum of $5 million. The offer closes at 5pm on December 14.

Mr Shadbolt, a Banks Peninsula farmer, described it as an "important opportunity".

Strong wool growers faced volatility in the market year-on-year and were "pretty bitter and twisted" about their returns.

The capital-raising was an opportunity to look forward, rather than back, and he believed that with patience, investment and commitment, rewards would finally be reaped.

"If we don't sort this problem out in the wool industry ourselves, and it will only be us that can do it, nobody else has an interest in the price of wool going up to us as growers. It is up to us.

"Unless we do that, unless we have sheep industry profitability, we'll continue to see the dairy conversions and the forestry blocks that are happening all around us," he said.

New Zealand produced the best crossbred wool in the world and it had a reputation for producing strong, white, bright fibre.

Wool comprised only 2% of all flooring in the total global market and while New Zealand produced 30% of crossbred fibre and was influential in that market, in real terms it was only 0.6% of all flooring.

New Zealand should not be selling wool as a commodity, where poorer wool and synthetic substitutes were the competitors; rather, it needed to focus on markets outside of that "bargain-basement price bracket".

Those high-value market segments included cruise ships, the aircraft industry and luxury hotels and apartments.

"At the moment, we push our wool out the gate and hope like hell somebody will buy it for a price. That's not a way to sell a product.

"We've got to work with the consumer in the market and develop a full strategy pulling it through and most importantly ... working with the current supply chain," Mr Shadbolt said.

It was going to be an evolutionary shift from commodity sales to branded sales, resulting in longer-term stable prices, while matching customer contracts to growers.

The vision was to be the leading innovative sales and marketing company for New Zealand strong wool, while the mission was to progressively improve the profitability of grower shareholders.

Those behind the drive were under no illusions that it would take time to build it into a commercial model, he said.

He believed $6/kg had to be the base price, which could then be grown incrementally while the industry worked with the customers in the market.

While there were some risks, Mr Shadbolt said if nothing was done growers would get what they had alway got - $3kg - and that was "not sustainable for any one of us in the farming industry, and certainly not sustainable for the sheep industry".

Farmers, who were the only ones that could change that, should be excited about the opportunity and he warned he did not think they would get another chance.

Lessons had been learned from the unsuccessful Wool Partners capital-raising and it was now realised that it was not the right model.

There was a lot of apathy among strong-wool growers and there was also a lot of concern around the sheep industry, because of wool and lamb prices. A lot of people had "folded their arms", but it was time to do something.

Wools of New Zealand director Phil Guscott said the sheep industry could not continue to be a competitive land use if it relied on one product - meat.

Wool had to "pull its weight", yet it had become "almost irrelevant" to a lot of farmers.

"If we don't do anything about it, it will remain where it is," Mr Guscott said.

sally.rae@odt.co.nz