Deadline looming on wool direction

Wool Partners Co-operative will extend the deadline no further. Photo Duncan / Brown

Sheep farmers have until tomorrow to decide whether to back a new wool co-operative aimed at uniting nearly half of strong wool production.

Wool Partners Co-operative said there would be no more extensions to a deadline originally set for November 30. Farmers can subscribe for a $1 share for every kilogram of greasy strong wool, with the capital raising conditional on getting a minimum of 55 million kilograms - a little less than half the shorn strong wool clip.

In an open letter last week, the co-operative said the offer was short of the target.

Federated Farmers Meat & Fibre chairman Bruce Wills said he supported the prospective co-operative.

"The reason I'm supportive is that every report we've had done on the wool industry talks about the need for consolidation, the need to unify growers and certainly from the farmer's point of view, the need to invest beyond the farm gate."

The decision on the co-operative was bigger that just the wool industry, he said.

"If the wool doesn't succeed it puts the entire sheep industry at risk. To me it's about cementing in some changes and about setting the entire sheep industry on a more sustainable, profitable future."

Industry fragmentation, disorganisation and being price takers at the farm gate were big issues.

"For me certainly what Wool Partners put on the table was a pretty compelling commercial option to go a long way to solving those three big issues that have plagued this wool industry for decades now."

There had been a remarkable recovery with the wool price on better lines almost doubling in a year, Wills said.

"We fully understand that most of the reason for the last 12 months' resurgence in prices is purely a result of demand supply imbalance because sheep numbers have been racing down for many years."

Total sheep numbers as at June 30 last year were 32.5 million.

Council of Wool Exporters president John Dawson said the organisation did not support the co-operative's concept or strategy.

"But at the end of the day it's the farmers' right to make that decision."

Higher wool prices were sustainable, Dawson said.

"We're not saying for one minute that there won't be some corrections at some stage but we're certainly at a new [price] level now," he said. "I think there's been a lot of changes in the industry and the market dynamics have changed a lot as well.

"There's a lot less wool ... and we went through the recession obviously and that's hurt wool very badly.

"But even if you go back before that I think one of the fundamental problems with wool has been promotion, or the lack of it."

The industry had seen a lot of changes.

"I think there probably is a case for some more alignment ... there is room for some consolidation of certain sectors ..." Dawson said. "But I think the industry as it is today is very well suited, or well resourced to take the wool industry forward in the future."