Lifting grower returns the focus of Wool Partners Co-operative

03 Dec '10

3 min read

The desire by farmers to get an adequate return from on-farm assets of $30-40 billion is the driving the creation of the 100 per cent grower-owned Wool Partners Co-operative Limited.

Wool Partners Co-operative Chairman Jeff Grant says the campaign to undermine the co-operative by the wider industry which has $200 million in assets is understandable, but mistaken.

“No-one should feel threatened so long as they grasp that the fundamental goal of the co-operative is to work with all elements of the industry to increase value in off-shore markets rather than fighting at home.”

“We know there is strong support for change. Surveys undertaken by UMR Research show that the co-operative is favoured by three out of five strong wool growers. Along with current Wool Partners International suppliers there are many other growers who have indicated their support, including those who have already sent their cheques in.”

“It is on that basis, and the need for Maori incorporations and growers operating through corporate and trust structures to comply with governance procedures, that Wool Partners Co-operative has extended the closing date of its capital raising to 17 December 2010.”

“The future of the strong wool industry should not be determined by a procurement battle. It should be settled through an industry restructure with farmer investment in building long-term relationships within the value chain, for the benefit of all involved,” Mr Grant says.

“This will bring transparency to the value-chain so growers can see the improvement in returns and the way those returns are channelled to them. Under the Wool Partners Co-operative structure, this would happen through higher prices for strong wool, supplier rebates and dividends on the growers' investment in the co-operative.”

Growers looking for validation of the Wool Partners Co-operative programme to boost returns for growers should note the recent contracts signed by Wool Partners International with retailers and manufacturers in Europe, England and the United States. Significantly, these contracts include royalties ranging from 50 cents to $2 a kilogram for the use of Wools of New Zealand and Laneve brands plus contributions towards marketing costs.

Capital raised by Wool Partners Co-operative will used to purchase assets from Wool Partners International. The net purchase price of those assets of $17.7 million includes debt of $24 million used as working capital by wool exporter Bloch and Behrens.

“The due diligence undertaken by Wool Partners Co-operative directors, and the expert advice received, indicates that the co-operative can operate profitably on its proposed structure and could expect to return a surplus to grower shareholders as a rebate or dividend in its second and subsequent full years of operation,” Mr Grant says.

“There is a lot to gain – or lose – for those growers who are still considering the impact aninvestment in Wool Partners Co-operative will have on the future profitability of sheep and beef farms.”

The Wool Partners offer closes at 5pm Friday, 17 December 2010.

Wool Partners Co-operative Limited