Referendum on wool levy seen as hope for industry

Wool growers need convincing on industry model. Photo by Stephen Jaquiery.
Wool growers need convincing on industry model. Photo by Stephen Jaquiery.
A referendum seeking to reintroduce a wool levy gives some hope for a remedy in a stagnant, dysfunctional industry, Lindis Pass farmer Russell Emmerson believes.

A referendum is being held in October, when farmers will be asked to approve a levy of between 2c and 5c for each kilogram of greasy or slipe wool at the first point of sale.

That equated to $4.6 million at 3c a kg for 154,000 tonnes of wool annually, if the 17,000 farmers eligible to vote agreed.

However, Wools of New Zealand (WNZ) says wool growers need to satisfy themselves that a generic industry-good model will provide any direct commercial benefits, and WNZ was unable to point to any examples where generic marketing had yielded the kind of benefits the Wool Levy Group was looking to achieve.

Mr Emmerson, whose views related mainly to the ultra-fine segment of the wool clip, said direction and leadership was required in the industry.

The commodity driven system for disposing of or dumping wool on the local and international market was not providing economic viability, he said.

An accountant's report showed the majority of hill and high country farms that were dependent on wool had shown a five-year average return of less than 1% on total capital invested, he said.

Merino sheep numbers were rapidly declining in the high country, due to economic viability. With high cost structures, including land and maintenance commitments, compliance issues and costs, New Zealand had become a very expensive place to produce wool.

''The reality is that we have a stagnant dysfunctional industry, local and global, with price-destructive elements,'' he said.

The proposed level of taxing was ''insignificant'' if it produced the expected result. Most importantly, the Wool Levy Group could give growers a political voice.

''A large proportion of wool is sold privately and actual sale data is impossible to obtain.

"Collection of this data for pricing levels and industry trends should be a priority and there are firms that provide this on a global scale.

"The present situation is very destructive and leads to the sale of wool below the cost of production,'' he said.

The Campaign for Wool could be the catalyst for global unity in the industry.

No segregation should exist in terms of fibre diameter and quality and a generic focus should prevail.

It would be refreshing to see a new group of administrators that could elevate wool to the luxury status with the global recognition that it deserved, Mr Emmerson said.

In a position paper on the proposed levy, WNZ commended the effort of the Wool Levy Group for raising the issues and opening up the opportunity for growers to have a say, and it urged all eligible farmers to vote.

It believed utilising an existing wool industry structure, such as the Wool Industry Research Consortium, which represented the whole of industry, including growers, had the ''ear of Government'' and could leverage grower funds against public and private funding, should be seriously considered.

''In our view this is superior to creating yet another structure in an already cluttered industry,'' WNZ chairman Mark Shadbolt and chief executive Ross Townsend said.

In addition, WIRL had a well-represented governance structure and administration function.

Funding was also available from the Ministry of Primary Industries' Primary Growth Partnership, they said.

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