Wool board reform ready to roll

By PHILIPPA STEVENSON

Legislation dissolving the Wool Board and making the most far-reaching changes to the industry in 70 years will go to Parliament next month.

Fears that the final phase of wool industry reforms, started two years ago, would languish in Parliament's legislative backlog have been scotched by Agriculture Minister Jim Sutton.

Cabinet ministers had approved plans to dissolve the board and put its assets into the hands of growers through a range of industry-good and public-good organisations, he said.

The wool industry, which earned $943 million from exports in the year to March, had been in a state of flux and uncertainty for several years, he said.

"I hope that this decision will give the industry a direction to work together towards."

The Wool Board Restructuring Bill would be drafted, introduced into Parliament by late next month and referred to the primary production select committee.

The minister said that submissions could be called before Christmas, and the Government would aim to pass the bill by May.

Under the Cabinet-approved proposal, the bill will convert the board into a company - dubbed Disestablishment Co, or DisCo - that will take over the assets and liabilities of the board.

It will continue to collect a levy on wool for industry-good purposes until June 30, 2004, or until a SheepCo commodity levy came into force.

SheepCo is a non-profit organisation set up last year to pay for research, industry training and market development.

The assets of the board will be allocated as shares to woolgrowers who farm more than 250 sheep.

Trading will be restricted for two years, and no grower will have more than a 5 per cent holding.

The board says its reserve funds, which stood at $109.1 million in June last year, are being gobbled up by the restructuring costs.

Its net assets this June were down to $79.5 million, and forecast to reduce to $67.3 million by next June, when it is due to be disestablished.



In what is expected to be its last annual report, chairman Bruce Munro said the cost of closing the board's international offices had been substantial.

"The costs of the reform process itself ... while within our forecasts, are taking their toll on total assets," he said.





At $31.9 million, spending associated with the reform and restructuring process started in the previous financial year was $7.4 million less than budgeted.

It included $10.2 million in transition funding for Wools of New Zealand and a $9.3 million provision to close a British pension scheme.

Levy income of $15.8 million, down from the previous year's $39.8 million after the levy rate was cut from 5 per cent to 2 per cent, contributed the bulk of the board's $25.3 million revenue.

The restructuring costs dragged the board's operating profit of $2 million down to a net loss of $29.8 million for the year to June 30.



The board's final annual meeting will be held in Invercargill on October 23, followed by a conference looking to the future of the industry.

The conference will include presentations by Sheepco chairman Mike Petersen, Wool Research Organisation managing director Dr Garth Carnaby, Ovita chief executive Damian Camp and Meat and Wool Innovation chief executive David Bremner.