Two farmer-owned wool companies are proposing to merge in a bid to create a stronger voice for the struggling wool industry.
Photo: RNZ/Cosmo Kentish-Barnes
Wools of New Zealand and Primary Wool Co-operative announced the move to their 2100 shareholders today - who will vote on the merger in November.
Ahead of the vote Primary Wool Co-operative will become the owner of CP Wool with the purchase of Carrfields Ltd's 50 per cent shareholding.
Strong wool prices have been depressed in recent years with the price of wool sometimes not meeting the cost of shearing the sheep.
Chair of Wools of New Zealand James Parsons said the concept of grower organisations getting together in the wool industry had been discussed for years.
He said creating one larger farmer owned company will give a stronger voice for farmers.
"By bringing the increased volume that Primary Wool Co-Coperative provides, with the marketing export, expertise that we have at Wools of New Zealand plus selling consumer branded products, that will create some really good synergies.
"If the merger happens our focus will be on how to get closer to the consumer- just merging two entities doesn't actually achieve that on its own.
"However, what it does is it brings more transactional income in scale, so that we can spread our overheads across a bigger volume of wool and then reinvest those savings back into demand creation activities."
Wool prices have been slowly rising but the industry is still depressed he said.
"It is an industry and there are farmers growers are actually looking for hope and struggling to find it - so we've been working really hard to try and turn things around.
"Consumers are turning to natural fibres, things are turning a corner we are seeing government policies actually looking to reduce the amount of synthetic and plastic products so we are heading in the right direction."
Parsons said if farmers voted for the proposed merger in November it would happen relatively quickly.
Primary Wool Co-operative chair and director of CP Wool Richard Young said the proposed merger marks the start of an exciting chapter for the wool sector.
"For CP Wool suppliers, it will be the link to greater customer intimacy via the Wools NZ market-focused strategy. For Wools of NZ growers, CP Wool will bring the engine with its large bale numbers and network of stores that allows that strategy to come to life."