Wrightson and Merino New Zealand propose joint venture

By PHILIPPA STEVENSON agricultural editor

Wrightson and Merino New Zealand are considering a joint venture fine wool company.

The proposal, announced yesterday, is the first commercial entity to be mooted following McKinsey & Co's restructuring report on the entire wool industry last June.

Wrightson, which already handles more than 70 per cent of the country's small Merino clip, and the grower-owned promotional body Merino NZ, have signed a heads of agreement outlining the key features of the proposed new company.

Merino NZ chief executive John Brakenridge said the proposed company aimed to sell and market most of New Zealand's fine wool.

Its objectives would be to maximise grower returns, reduce costs, promote efficiencies and increase demand for the wool.

Wrightson managing director Allan Freeth said his company would transfer all its Merino business to the new company.

"Our skills and experience as commercial operators, and our infrastructure, combined with the marketing talent of Merino New Zealand and the support of Merino growers, will create significant new market opportunities for growers," he said.

"We are confident it will bring significant benefits to the Merino industry and to our own shareholders."

Under the proposal, growers would retain ownership of Merino NZ Inc, an "industry good" organisation, for administering a grower levy. Growers would also own a holding company, which would have their shares in the joint venture.

Growers would initially have four seats on the new company's board, and Wrightson two directors.

The agreement has been approved by the Wool Board and the group overseeing plans arising from the McKinsey study, the Implementation Project Team. Merino farmers will vote on the proposal next month.