Wool tangle set to unravel

By PHILIPPA STEVENSON

A producer-driven group aiming to rise from the snarl that is the wool industry claims to be gaining farmer support for its proposed integrated wool supply, sales and marketing company.

Growerco has held meetings in Masterton, Te Kuiti, Taumarunui, Taihape and Waipukurau to outline the proposal to farmers, and more meetings are planned.

Chairman Sir Brian Lochore said he was encouraged by the support from growers who realised that the plan was a solid one which could lead industry reform.

"It's clear that growers want reform, and they want a plan they can invest in and that brings them together," he said.

The first glimmers of unity in an industry divided by almost as many opinions as there are participants may have started to appear at last week's annual meeting of the Wool Board in Napier.

The dissidents left the board hierarchy in no doubt about their feelings, but there was also a degree of unity which observers say has not been evident for some time.

For decades, while wool prices were good, growers did not question their producer board as its tentacles spread far and wide and empires arose around them.

Inevitably, when prices collapsed to levels which made taking the wool off sheep marginal, farmers started to focus their attention on the board's performance.

International consultants McKinsey prepared a $3.3 million report recommending a structure under which the board would cease to exist and farmer levies could be halved.

But dismantling one empire and setting up another was not that simple, and debate has raged in wool-growing circles for the past year about just how the board's activities would be rearranged.

Also at issue was what would happen to the $116 million in board reserves, now rapidly dwindling as the cost of dismembering an empire grows.

One of the key issues is the question of how coarse wools - most of New Zealand's production - will be sold and promoted under the new structure.

After the collapse of the McKinsey-inspired Strongwools group, two groups are publicly chasing the business.

One is Sir Brian's Growerco, also fronted by southern Hawkes Bay farmer Edwyn Kight.

On the eve of the last week's annual meeting came details of another group, signalled by Wrightson a few months ago.

The company, which already has a joint venture with Merino growers, has signed a heads of agreement to establish a similar consortium in strong wool.

The other parties are Feltex Carpets and the 380 grower-backed, Dannevirke-based East Coast Wool Co-op, which trades as Associated Wool Exporters.

Feltex general manager Ian Barbour said the consortium had the commercial experience and understanding of growers and processors to rapidly advance the strong wool industry, matching supply with processor need.

"This move is long overdue," he said. "The current supply chains are not cost-effective and the structures do not create an environment where productivity gains can be exploited."

The announcement prompted strong pleas at the Wool Board meeting for the two groups to get together.

The frustration of growers at what they see as a lack of progress towards achieving the planned wool industry changes was expected to come to a head with two hard-hitting remits.

One called on the Government to appoint commissioners to take over the board functions. The other called for a vote of no confidence in the board's ability to make the right decisions.

The two remits, from Hawkes Bay farmers Tom Crosse and Tom Atchison, were withdrawn at the 11th hour.

Mr Atchison is involved in the Wrightson consortium. He said that despite widespread dissatisfaction with the whole process and a lack of information, there was also a feeling of unity at last and the two motions could be divisive.

In spite of the fractious nature of the industry, a strong feeling exists that things can get better for wool.

Agriculture Minister Jim Sutton pointed to the lessons of the meat industry in the early 1980s.

"At that time, the meat industry was grappling with low prices, weak demand and declining competitiveness compared to white meats and other alternative products," he said.

Now, the sheepmeat industry was profitable.

Part of that was due to marketing entrepreneurship and changed industry structures.

"However, I believe the major factor in sheep meat profitability has been the improved eating quality of our lamb exports, together with enhanced packaging, presentation, and cuts that appeal to changing consumer needs.

"This has been achieved through niche market development, greater responsiveness to customer demand, technological advances in meat tenderness, consistent quality and chilling and packing innovation."

The board did not give the country's 15,000 wool growers any indication of when they could expect to vote on the crucial issues of restructuring.

A vast amount of detail remains to be worked out, not least of which is how the board's reserves will be given back to farmers.