Talks on wool Co-Op merger stall

Difference in the motives of their business partners appears to be the sticking point in merger talks between two wool co-operatives, the future of which appears finely balanced.

Wool Grower Holdings director Mark Shadbolt said last week that if there was no resolution by the end of this month, his company intended finalising its prospectus which it would release in the coming months reports The ODT. A merger or some other working relationship between the two farmer-owned wool co-operatives, Wool Grower Holdings and Primary Wool Co-operative, was being brokered by former Meat and Wool New Zealand chairman Jeff Grant, but the sticking point appears to be the motives of their respective commercial partners.

Mr Shadbolt said Wool Grower Holding's (WGH) business partner, Wool Partners International (WPI), was set up by growers so they could have control and ownership of a marketing company. Primary Wool Co-operative has a joint venture with Elders, Elders Primary Wool, but Mr Shadbolt said the point of conflict was that Elders was using the relationship with growers to procure wool and sell other farm products and services and there appeared little likelihood of growers owning that wool business outright. "This is a fundamental difference and they [Elders] have said they don't see grower ownership and control as important." But Primary Wool's chairman Bay de Latour said, when approached, that such remarks were unhelpful. He was still keen for the co-operatives to merge, but said such comments made it difficult to maintain a working relationship.

Mr Shadbolt told about 60 growers in Lawrence that both his company and Primary Wool Co-operative were keen to form a single grower co-operative that would own the Just Shorn, Wools of New Zealand and Laneve brands. While he supported work Elders was doing in the market, Mr Shadbolt said the two groups could not continue talking forever. If there was no progress in the two co-operatives joining forces by the end of May, he said WGH would start finalising the details of its prospectus. Mr Shadbolt told South Otago wool growers the future of the industry was in their hands.

He was part of a group of 19 Banks Peninsula wool growers who have formed Banks Peninsula Farms, a company aiming to market their own wool. Mr Shadbolt has said growers needed at least $6 a kg, a figure wool manufacturers told him could and would be paid, but was not paid because of the fragmented way wool was sold. "We were told to go home and fix up supply issues. If we do unify, we will quickly see this industry turn around," he said.