Consolidation is a must if New Zealand’s strong-wool industry is to thrive again, Federated Farmers Meat and Wool chair Toby Williams says.
“What we have got is silos and none are bringing returns to the farmer. We need contracts,” he said.
Contracts could build farmer confidence.
“I’m not saying $10, that’s pie in the sky, but $4 even, a kilogram for your wool meeting required specification – growers get a guaranteed price and the buyer and the end user get guaranteed quality of product.
“My biggest concern at the moment is the commercial interests are there but will pay just enough for farmers to keep growing wool, but we need to make money.”
Farmers’ frustration levels are such they are walking away.
“We are losing farmers from the industry and we will lose more. It’s too hard and they can’t be bothered any more, so they walk.”
Williams does not necessarily believe a return of the wool levy is the answer, but it could contribute.
A decision by farmers in 2004 to rule out the wool levy led to the dissolution of the Wool Board and left the sector without a well-resourced body promoting wool.
Without a governing body for almost 20 years, there have been a lot of factions.
“Farmers abandoned the Wool Board because they didn’t like the leadership, now we still have the same leadership but under different umbrellas in different silos.
“We need change and we need it urgently. Twelve months is too late.
“We want to be a Zespri, or a Fonterra.
“We have Wool Impact but we have not gone anywhere and while a wool levy is not going to make the change needed, it could be one way of funding a new leadership structure and it provides a market budget.”
Williams alluded to a wool levy when he addressed the August meeting of Parliament’s Primary Production Select Committee.
“I did throw it in as maybe deserving debate but we have got to be very careful about this.
“Levies have failed in the past and organisations that rely on them continue to be under threat.
“The people who control the levies, the boards and management around them don’t always listen to what the levy-payers want them to do, or fail to deliver.
“Nothing has changed in that respect and it won’t until we get a whole new level of new leadership. Just bringing in the same ones over again is taking us nowhere.
“Look at Wools of NZ: we had $9 million invested in funds equity. In the latest report that has turned into $2m; $7m lost less than a year ago.
“They followed the wrong things. We are not going to make money out of flooring, that’s fairly obvious and they are going to run out of money.
“It’s been too much about each silo protecting its own patch. Well, unfortunately that patch is disappearing.”
Williams said it is 10 years since he last made money off wool.
“It costs me $40,000 to shear my sheep every six months, so that’s $80,000 for 6000 sheep.
“Our return this year on the last shear was $30,000, a 25% loss.”
Williams doesn’t expect the government to rescue the industry.
“The sector’s responsibility is to get its own house in order in terms of a workable single body and leadership structure before it looks to government for more investment.
“Federated Farmers, as an organisation batting for growers’ interests, can take a lead bringing people together on that mission.”