Wool co-operative may yet arise

The 2000 farmers who supported the failed bid to form the Wool Partners Co-operative could end up owning all or part of a wool company.

Talks on options will begin next week between growers, PGG Wrightson, and exporter and marketer Wool Partners International (WPI), but all indications point to the 2000 growers who supported the co-operative being invited to buy all or part of WPI or some other entity.

Wool Partners Co-operative (WPC) announced yesterday it had only attracted share subscriptions for $40 million, equivalent to growers committing to supply 40 million kg of strong wool, 25 million kg short of its target. That constitutes 30% of the country's strong wool clip.

PGG Wrightson managing director George Gould said an identifiable group of 2000 farmers supported changes to the way wool was sold.

"It is a finite group, [which is] committed."

Discussions about where to from here would look at a joint or close to a joint shareholding in a WPC-type of company, or a complete transfer of ownership to farmers over time or upfront.

"Any of these options would be good for us, but we won't stand in the way of grower determination to own the wool industry," he said of PGG Wrightson's position.

"In the end, if grower support is not sufficiently tangible, it will go back to the way it was before WPI was considered," he said in Dunedin yesterday.

PGG Wrightson has resumed day-to-day ownership of WPI but Mr Gould said it was a profitable company.

It also included exporter Bloch and Behrens as a stand-alone entity within WPI and rights to the Wools of New Zealand brand, making it a more vertically integrated business than when 51% was sold to growers through Wool Grower Holdings, Mr Gould said.

WPC chairman Jeff Grant agreed there was still potential to change the way wool was sold, saying discussions would start as soon as possible to ensure momentum for change was maintained.

"What the industry has to do now is continue to have the conversation to find a better way to connect with growers and allow growers to reapbetter benefits."

He said there was a clear message from growers that the status quo for selling wool, by auction or directly to merchants, was not an option to ensure the sector's long-term future.

"We always knew that this [capital raising target] wassetting the bar very high, but for an industry in decline, major change was needed."

How growers responded in the next few weeks would determine the industry's direction.

WPC identified 65 million kg as the minimum amount of wool needed to be handled by one company to consolidate the industry and to make a difference in the market.

Any less than that and Mr Grant said it would have required like-minded other companies to join or risk competition for wool and procurement tensions.


Add a Comment