CWH disposing WSI scouring arm will make farmers angry

22 Dec '11

2 min read

If Cavalier Wool Holdings (CWH) cuts-off the scouring operations of Wool Services International (WSI) post-acquisition, the New Zealand wool industry would lose an essential asset and it would invite wrath of farmers, according to Peter Crone, Managing Director of John Marshall & Co., a Christchurch-based wool exporter.

Mr. Crone was speaking in the context of CWH obtaining the Commerce Commission's nod to bid for establishing wool scouring monopoly in New Zealand by obtaining a major shareholding stake in WSI, New Zealand's leading wool exporting company having a large number of woolgrowers as its shareholders.

The wool growers would get enraged once they learn about the impact that CWH monopoly could lay on future of the wool scouring industry in New Zealand, Mr. Crone said.

He added that wool growers have been constantly saying that they wish to invest and own a stake in a large-scale, vertically integrated wool industry firm and WSI well matches the profile.

He expressed his surprise at the Commerce Commission's decision that was subsequently upheld by the High Court in response to an appeal made by carpet producer Godfrey Hirst.

He added that both the Commerce Commission and the High Court over-rated the advantages and under-rated the consequences that a scouring monopoly would bring on the New Zealand economy as a whole.

The last wool industry rationalization decision, whereby the Commerce Commission permitted a wool dumping and handling monopoly, was a big mistake, as following the Commission's wrong decision all wool exporters now need to pay 27 percent higher in Napier and 19 percent more in Christchurch, he informed.

Last fiscal, WSI registered a record profit of NZD 6.6 million. However, the 64 percent stakes held by Plum Duff and Woolpak Holdings, who have been hit by the South Canterbury Finance slump, is being sold by a receiver.

Fibre2fashion News Desk - India