Where to now for wool
20th May 09, 2:44pm
Wool Partners International has just completed 42 meetings to tell farmers why they should supply their clip to it - the first company able to take strong wool from the farm through to the market. Farmers are disenchanted with wool returns that have halved from 20 years ago to $3 a kilogram, not even covering their costs. Many have given up on sheep, with stock numbers plummeting from 70 million in the 1970s to 33 million reports the Nelson Mail. Abercrombie describes the industry as fragmented and dysfunctional, but he has a recovery strategy to put to the farmers. Wool Partners' solution is setting up the only fully integrated company to be able to take strong wool from the farm gate right through to the market. Some see it as a ray of hope. Others wanting to protect their interests are out to undermine it, and that's where it gets dirty. Most at the meeting are wanting to learn more so they can make up their minds. Wool Grower Holdings is to be a grower co-operative and the means through which growers invest in Wool Partners International. Wool Grower Holdings has control over Wool Partners because it has 60 per cent voting rights, and farmers will be able to buy $1 shares based on 20c/kg over five years. Director Mark Shadbolt tells the farmers it is a unique opportunity to get involved in a company that gives them ownership and control of the strong-wool industry, something sadly lacking for a long time."The status quo is not workable and the returns we get for our wool unsustainable," he says. However, he warns it is a long-term problem which will take a long time to fix. "If you've come along here this afternoon thinking we are going to have increased prices next week or month, you'll be disappointed. This is going to take years." He passionately tells them the change is in their hands, as farmers. "We have to get away from chasing 10c a kilogram here or there to do a deal, we have to start setting targets and aiming for $1 increases; that's where we're going to turn this industry around." The four-point recovery strategy Abercrombie outlines to get back on track starts with unifying growers to give them strength in numbers, then consolidating the clip to put them in a stronger selling position than in their current fragmented state, collaborating within the industry to improve efficiencies and take out costs, and then to have innovation in the market finding new uses for strong wool - traditionally used in carpets and rugs. He talks of opportunities in insulation, clothing and bedding.