Farmers shouldn’t rely on a consumer backlash against synthetic fibres for a revival in coarse wool prices, Robert Pattison writes.
Two decades and it seems nothing has changed, just another talkfest to discuss solutions for raising the price of New Zealand coarse wool.
Synthetic carpet manufacturers have had 20 years without any competition from coarse wool farmers to promote their flooring products as superior to wool.
Coarse wool sheep farmers haven’t supported their fibre within and beyond the farm gate since they stopped paying wool levies in 2009. Their wool is shorn, pressed into bales and sold as is, where is and unless there is an enormous change in the way coarse wool is promoted and traded, they can expect to receive low wool prices in the foreseeable future.
Minister of Agriculture Damien O’Connor must be congratulated for his initiative in hosting a summit to talk about opportunities for NZ’s coarse wool with wool industry representatives.
There were around 40 people at the summit held in Wellington in July which included Government officials, coarse and fine wool farmers, wool brokers, merchants, exporters, manufacturers, scientists and textile designers.
The main outcome from the summit was the formation of a working group to focus on the key priorities identified. These were; capturing the NZ Wool Story, industry structure, connecting the value chain and developing a ‘future vision’ for the industry.
Sound familiar? It should because the story of NZ wool has been around for more than 70 years, since the NZ Wool Board was established in 1944.
The group will also be responsible for determining how it will constitute itself to achieve set outcomes. A working group of 20 sheep farmers, processors and other industry representatives met in September. The meeting was held in Christchurch and were to develop an action plan before the end of the year.
Involving manufacturers and interior textile designers is a good start, as the wool and textile industries have been treated as separate entities in the past. Historically, sheep farmers have never considered they were part of the woollen textile industry.
Wool promotion has targeted the biological, environmental and sustainability properties of wool. In fact billions of dollars (1945 to 2009 NZ$4.1b) was spent on research, product development and promoting the attributes of wool to consumers. But history has shown it doesn’t lead directly to increased wool prices at the farm gate.
Consumers don’t buy wool; they buy woollen textile products of which wool is one component.
Hopefully the minister was smart enough not to invite the people involved in the Wool Industry Task Force set up in 2009 by the National Government’s Agriculture Minister David Carter. That achieved absolutely nothing.
A search on the internet shows the Government has poured more than $80 million into coarse wool research and product development since 2011. All the research projects have promised increased wool prices.
But since 2011 coarse wool prices have more than halved, the coarse wool indicator (CWI) for December 15, 2011, was 589c/kg clean. The CWI for December 13, 2018 was 272c/kg clean. That shows every research project has failed to deliver increased wool prices.
So who is getting the benefit from all this corporate welfare?
It’s not coarse wool sheep farmers or NZ taxpayers. It seems commercial enterprises such as NZ Merino Company, New Zealand Wool Services International (now an Australian-owned company), AgResearch, Lincoln Agritech and Otago and Massey Universities, the Ministry of Business Innovation and Employment (MBIE) and Wool Industry Research Ltd (WIRL) are the main beneficiaries.
With the exception of farmers who have invested in companies such as Wools of NZ, Primary Wool Co-Operative and Carrfields Primary Wool (CP Wool Partners) and a number of independent farmers who have privately ventured into manufacturing and adding value, coarse wool farmers have chosen not to fund research and product development.
Many wool businesses working in the supply pipeline will be contributing to their own product and market development programmes. But there is no formal collective industry research and market funding strategy.
Coarse wool sheep farmers voted unanimously to disestablish their NZ Wool Board and stop paying compulsory wool levies, meaning there was no funding for continued research or market and product development. They believed the Wool Board had failed them on the basis of wasteful spending and unacceptably low wool prices.
That was despite Wools of New Zealand having commercial relationships with 150 licensed Fernmark brand partners consuming 83 million kilograms (70%) of NZ coarse wool production at a value of NZ$300m annually. In fact NZ coarse wool was commanding a 30% premium over British and European wools.
There hasn’t been a cohesive strategy for the coarse wool industry since.
