Kiwis to vote on wool levy

Several New Zealand initiatives - most notably the sportswear brand Ice Breaker - have been held on a pedestal for their innovative ways at returning profitability and capturing market share.

But it seems the country's innovative business and marketing models haven't turned out to be the silver bullet many onlookers expected.

Federated Farmers of New Zealand Meat and Fibre industry group vice-chairwoman Sandra Faulkner says there has been no levy collected in NZ since 2009.

While some companies have charged their wool suppliers with a marketing and development fee, the industry has voted to go to a referendum, and voting on the return of a levy closes tomorrow.

Ms Faulkner said there were areas of the industry that needed better organisation and funding which didn't necessarily bring a competitive advantage for a private company, but were important for the industry's competitiveness at the grower level.

She said the levy didn't need to fund the science, as there was already considerable investment in research.

Instead it needed to deliver on three key points: innovation (extension of research back to farms); education (at the tertiary level to increase skill levels to work around existing campaigns, such as The Campaign for Wool and the International Wool Textile Organisation to raise demand for wool), and communication (for representation at a government level, in trade and market access negotiations and to make sure NZ growers had access to independent, non-commercial information for on-farm business decision making).

She said the referendum proposal was the result of four years of industry-wide consultation and an independent business case prepared for the Wool Levy Review Group which was originally set up to evaluate the discontinuation of the levy.

The levy will be payable at the first point of sale for a producer's wool, such as the auction floor, broker, or meat processor.

Ms Faulkner estimated more than 50 per cent of NZ wool was sold through auction, despite many growers having invested in marketing companies.

It was expected the levy would raise about $4.2 million (the levy is set at 2.75 cents a kilogram), based on an average of a 5.4kg/year per sheep.

The vote will have to pass two tests based on those wool growers who vote; the first being to win more than 50 per cent of votes in a one farmer, one vote system.

The second is a weighted sheep numbers vote, where producers get one vote per every 250 sheep.

Among those voting yes will be Romney New Zealand president Malcolm Wyeth, Manu Romneys, Masterton, North Island, NZ.

He runs predominantly Romneys in his 4000-ewe operation, along with a small flock of registered Suffolks.

The Romney breed - its wool in the 38- to 33-micron range is currently making 525c/kg to 580c/kg (greasy) - makes up about 40 per cent of NZ's sheep flock and Mr Wyeth says NZ wool needs more promotion, particularly overseas.

"My biggest fear is... what's $4m going to do with what they're targeting to do with education, innovation and communication?" he said.

The industry needed structural consolidation, particularly given the country's sheep population had dropped from 70m in the early 1980s to just 30m in recent years.

While some players in the supply chain had dropped out in that time, he said there remained too many for how much the industry had shrunk.

Meanwhile, some brands such as Elders Primary Wool and Just Shorn New Zealand Wool were getting good traction into markets such as the US and Mr Wyeth said by consolidating marketing behind such brands would help grow end user markets for NZ wool.

A PUSH to re-introduce a wool levy in New Zealand is a waste of resources, says South Island woolgrower, Ron Small, who runs the 3170-hectare Blairich Station at Blenheim.

With his son Tom he runs 9000 Merinos, measuring 17.5 to 18 micron and including bloodlines from Australian studs, such as Roseville Park, Wurrook, Poll Boonoke and Tara Park.

“I voted no – the Merino sector already pays a voluntary levy to The Merino Company (a NZ-owned Merino product developer and marketer) for research and development (R and D) and market promotion,” Mr Small said.

“Along with other fees (for direct contracts and Merino meat differential), I think we pay about 6.5 per cent to The Merino Company for various things,”

Mr Small expects as many as 90pc of NZ Merino growers would vote no on the basis they’re already paying a levy.

While he sees the crossbred wool sector being the main group of producers who will benefit from the levy, he didn’t think the proposed levy would make enough money to make a difference.

In his view, a new wool levy could work if it was administered through Beef and Lamb, which already exists (and used to handle the old wool levy under its previous name, Meat and Wool).

Mr Small (pictured with Tom) was one of the growers who in the late 1990s fought to extract the Merino clip from the old NZ Wool Board, because “it had become a dinosaur”.

“It seems to me by the time they take out administration costs (and) the little bit of money they’ve got for R and D, the little bit for market promotion is just a drop in the ocean. It doesn’t go anywhere,” he said.

Meanwhile, he said crossbred wool (24-plus micron) was selling well without a levy.