Wools of NZ plugs investment plan to wary farmers

PENNY WARDLE
Last updated 07:24 26/11/2012

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Wools of New Zealand chairman Mark Shadbolt, of Banks Peninsula, was in Marlborough on Friday seeking $5 million to $10m of farmer investment towards strengthening the company's brands and increasing market connection.

Tuamarina farmer Pat O'Sullivan got short shrift at a meeting for saying the proposal was bound to fail.

About 20 farmers and industry representatives were at the Giesen Sports and Events Centre in Renwick to consider whether to invest $5000 plus 15c/kg for their wool for five years in keeping the company and its brands in the market.

Director Phil Guscott, of Wairarapa, said there had been backward-looking people at every meeting around the country. If farmers did not believe in the people behind the Wools of NZ proposal and their strategy, they should not invest. "If you get involved we will work our tails off to make it work," Mr Guscott said. "If we fail our industry will die."

Mr Shadbolt said carpet prices had increased an average 2 per cent to 5 per cent a year, but wool prices to the farmer had stayed the same. The gap was getting bigger.

The company proposed that farmers would retain ownership of their wool through the supply chain as far as the spinner or manufacturer, where it would change hands. Farmers would pay wool buyers, processors and exporters a fee for service, rather than wool being bought and sold at each step.

Banks Peninsula Farms, which he belonged to, had already put an extra $1/kg or so in farmers' pockets by following this model, which on a product worth about $3/kg clean was a significant increase.

For 30 years farmers had been paid about $3/kg clean for wool, with some ups and downs, Mr Shadbolt said. As retail carpet it was worth $120-$150 per square metre which worked out at at $144-$180/kg for the wool.

The aim was to develop a market pull strategy by increasing branded contracts and providing customer feedback to shareholders, Mr Shadbolt said. Farmers would earn money from royalties from established and new Wools of NZ contracts.

"The faster growers commit the faster we can can get started on these opportunities," he said.

Mr O'Sullivan suggested to make money farmers should retain ownership of their wool from the sheep's back to the retail store. However, Mr Guscott said this was too high risk and farmers could not afford to cover costs through the supply chain.

"If you can't afford $5000 and don't believe in the people and the strategy don't invest," Mr Guscott said. "But if you don't invest, you might die wondering if the strong wool industry could have been saved."

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After the meeting Marlborough farmer and Wool Research Organisation chairman Derrick Millton said: "Too many people are looking at this proposal and thinking, ‘it's that old company that spent $200 million'. But really it's the passion of the people behind this proposal that's the important thing."

Mr Millton, who farms at Waipapa near Kekerengu, said growers needed to be united to move forward together.

The Wools of New Zealand Trust bought the company from PGG Wrightson in October last year after a failed attempt to establish a wool co-operative.

- The Marlborough Express

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