Wool industry plan many years overdue

By TONY LEGGETT*

June 19 should be a red-letter day for New Zealand's 20,000 serious wool growers.

It is the likely release date for the long-awaited Wool Industry Development Plan, produced by international consultancy McKinsey and Company.

The report is now a month overdue and delays have done nothing for its credibility.

Regardless of claims that it now lacks independence, this report is really years late, not a month.

Time is running out to find a solution to the declining profit growers can extract from this unique fibre. The frustration is that wool has qualities which, they are told, none of its many competitors can match.

A small group of growers gave the Wool Board the green light to fund the rescue plan at last October's annual meeting in Rotorua.

Their overwhelming support for the plan was tagged with the proviso that the consultants worked independently of the board and its subsidiaries.

The fear that the average grower simply would not accept another Wool Board report was justified. Shortly after, the board announced plans to form an Independent Stakeholder Group (ISG), to ensure adequate independence and to assist with the implementation of the completed plan.

This 12-person group comprises mostly growers and is chaired by experienced Otago businessman Ian Farrant.

The report's cost so far is an estimated $3 million, equivalent to $150 a wool grower. It is a paltry sum if McKinseys get it right.

Even if they do, history suggests having the rescue plan adopted is a bigger challenge.

Almost without exception, the 20 previous wool industry reports over the past two decades have recommended shortening the wool pipeline from sheep's back to final product. But it is difficult to find evidence of any industry sector taking up the advice.

This fact is not lost on the few who now challenge the report's independence and chances of success. Most recently, Act MP Owen Jennings suggested that senior Wool Board staff had interfered in the report.

Not surprisingly, Jennings' views match those of Phil Verry and Ian Walsh, promoters of their own model for wool sector revival, which was dismissed early in the process by the McKinsey team.

Another critic is the Council of Wool Exporters. This lobby group has doubted the independence of the report since day one, accusing growers of being stupidly naive.

It is clear that McKinseys will suggest growers get closer to their customers through a variety of direct-to-mill supply contracts.

Targeting markets which can afford to pay high prices for wool products is another likely scenario.

The $100 million in Wool Board reserves may also be suggested as a venture capital fund. The board's promotional arm, Wools of New Zealand, has come in for criticism from McKinseys for its Fernmark branding strategy, although its chairman has just released plans to refocus its efforts solely in the carpet sector, obviously with the consultants' blessing.

As for the board itself, few growers will be concerned if it disappears along with a large chunk of the 5 per cent compulsory levy they pay on wool sales.

ISG chairman Ian Farrant has the challenge of a lifetime on his hands to draw an increasingly sceptical and disparate group of growers together behind the McKinsey recommendations.

He will know that growers require more than glossy brochures and glitzy presentations to convince them to change.

Tony Leggett is editor of Country-Wide monthly rural newspaper circulating in the lower North Island.