Woolgrowers up for $10M if Hybrid Fails to Fire - 3 September 2008

Wool proceeds and share investments would be covered by Meat and Wool New Zealand with all woolgrowers generally exposed, if the proposed hybrid co-operative wool company fails, owing $10 million to PGG Wrightson.

Meat and Wool NZ chairman Mike Petersen gate crashed a media briefing in Wellington last week and opened himself up to some hard questions from wool exporters, wool brokers and private wool merchants.

It was a bonus session for the press when Shaun Ryan, president of the Federation of Wool Merchants, asked Mr Petersen who was liable to repay the $10 million loan advanced to the hybrid co-operative by PGG Wrightson.

Mr Petersen tried twice to skip a direct answer, but eventually confirmed that if the new wool company failed it would be New Zealand woolgrowers who would repay the money.  

The United Wool Marketers Group says the Wool Industry Network-sponsored hybrid co-operative and its stated objectives is the wrong model to achieve on-going demand and an equitable return on wool.

They say global research by the International Wool Textile Organisation pinpoints the problem and there is a need to relaunch wool as a fibre at consumer level. The trimmed down Woolmark was already working in the textiles area on behalf of other crossbred wool-producing countries and New Zealand should join them, rather than compete with its own brands.

When international wool promotion was dropped, it created a lost generation of consumers who understand the special attributes of wool and the reasons they should pay a premium over synthetics. 

Exporter Peter Whiteman said he was like many in the industry who supported the launch of grower brands 10 years ago, but they didn’t work.

“Instead of repeating the same mistakes of the past we’ve got to look for different solutions and the United Wool Marketers would support growers with a dollar for dollar promotional spend,” Mr Whiteman said.

The United Wool Marketers will take its message direct to the grower through its extensive woolbroking and private merchant channels, and with the help of farmer groups.