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A war of words has broken out in the struggling wool sector as the Wool Exporters Council continues to attack a new company launched to boost returns.
The Wool Company officially started operations last week, with former Telecom chief executive Theresa Gattung as chairwoman.
The company combined the wool operations of rural services business PGG Wrightson with prospective co-operative Wool Grower Holdings.
The Wool Exporters Council, which represents about 13 companies covering about 84 per cent of exported wool, has said the new entity had little or no support, lacked wool marketing experience and that Gattung demonstrated she knew nothing about the subject.
The council kept up its criticism yesterday, warning that the industry would be decimated if it turned out the Wool Industry Network, which formed Wool Grower Holdings, had made a mistake. Council chairman John Henderson said there would be no second chance once the wool industry infrastructure and selling system was demolished.
"When it's gone, it's gone and at present there are no hard facts out in the public arena around the deal the Wool Industry Network negotiated with PGG Wrightson or how growers' wool will be sold once the auction no longer exists," Henderson said.
"Growers need to ask themselves, 'does this new company have a capable pair of hands?' because there is such a lack of hard facts and it is pure speculation that this is going to work."
PGG Wrightson would initially have a 50 per cent equity stake in the new company and 40 per cent voting right, with 60 per cent for Wool Grower Holdings. The Wool Company agreed to buy PGG Wrightson operations, including brokering, procurement, warehousing, auction, marketing and exporting for $37.5 million, with $10 million in cash, $10 million of ordinary shares and $17.5 million in convertible preference shares.
It was hoped other industry players would get involved and this month the new company agreed to buy Allied Farmers' wool business.
Gattung said last week that the Wool Company would focus on creating a brand for New Zealand wool while bringing producers together to enable New Zealand to negotiate on a collective basis.
Mike Petersen, chairman of Meat & Wool New Zealand - which along with New Zealand Trade and Enterprise funded the Wool Industry Network - said the Exporters Council criticised people advocating change.
"Quite clearly they want the status quo to continue and if we have the status quo then the industry will die," Petersen said.
Wool Grower Holdings chairman and sheep farmer James Aitken said he was disappointed with the response from the council.
"Had the wool exporters themselves come up with an initiative saying, 'Well, we're all going to band together to provide a united front for New Zealand wool', well gee, the farmers would have carried them shoulder high down any street they wanted to name," Aitken said.
Farmers were lucky if the price of wool covered the cost of shearing and many people now regarded it as merely a byproduct, he said.
Aitken said an auction could exist to meet the preference of some farmers but he hoped the vast majority of customers and suppliers would move to a direct contracting system.
