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Major new wool cooperative formed

For Immediate Release October 8 2002


Major new wool cooperative formed

Two of New Zealand's largest cooperative wool entities have merged to form the country's biggest wool cooperative, providing a solution to the industry's search for a farmer-owned wool marketing entity that is closely integrated with end users.

East Coast Wool Cooperative Ltd of Dannevirke and the wool division of Combined Rural Traders (CRT Primary Wools) based in Christchurch, are joining forces to form Primary Wool Cooperative Ltd.

The new entity is expected to have an turnover of more than $50 million in its first year of operation.

East Coast Wool Cooperative Ltd is a North Island-wide wool marketing cooperative with 400 shareholders, and is currently handling some 86,000 bales of wool a year. It also has two subsidiary companies: a trucking division (AWE McNicol Transport Ltd) that moves more than 450,000 bales of wool a year in the lower North Island, and a dag crusher operation.

It markets wool overseas under the trading name of Associated Wool Exporters (AWE).

CRT is a diverse South Island-wide farming cooperative with some 9000 shareholders. Its Primary Wools division is currently handling around 54,000 bales of wool a year.

The new company, which begins on November 1, will handle more than 140,000 bales of wool a year, making it the second largest procurer of wool in New Zealand, and the largest wool cooperative by a significant margin.

Under the new structure, wool procurement throughout the country will be handled by Primary Wool, but all its overseas trading will continue under the well-established AWE brand.

Primary Wool Cooperative Ltd will have full wool stores or depots in Invercargill, Mosgiel, Christchurch, Wanganui, Masterton, Taihape, Dannevirke, Waipukurau and Napier. As well it has wool buyers and field representatives based throughout the country.

The board of the new company will be made up of representatives from both cooperatives, woolgrowers, and Elders New Zealand Ltd which will have a small shareholding following the merging of Elders' wool division into East Coast Wool Cooperative Ltd last year.

That was followed by the employment of the management and majority of staff of Wanganui-based Farmers Wool Cooperative last year, which gave East Coast Wool Cooperative Ltd complete North Island coverage.

The managing director of Primary Wool Cooperative Ltd is Brian Murray, currently managing director of East Coast Wool Cooperative Ltd, who has been involved with the Cooperative since the 1970s.

Other directors are Bay de Lautour who will be chairman, Graham Twist and Mike Murray representing woolgrowers; Stuart Heal (CEO of CRT); Howie Gardener (a CRT director and chairman of the CRT Wool Committee); Dave McGaveston (a CRT director) and Stuart Chapman (Elders NZ Ltd). Rob Cochrane, currently general manager of CRT's Primary Wool Division is South Island manager-designate of Primary Wool Cooperative Ltd.

Mr Murray says individual woolgrowers will have the opportunity to buy into the cooperative and become shareholders.

"Obviously we want to attract as many wool growers as possible to use our services, but we also want them as shareholders," he says. "We're not looking to growers to take major shareholdings, but even a nominal shareholding will enable them to share in the returns because they'll be part of a cooperative company. Our thrust is that the profits will go back to growers, and that means we'll retain all the earnings within the wool producing sector, instead of loosing it to commercial investors."

Mr Murray says Primary Wool Cooperative Ltd will focus on rewarding supplier/shareholders based on their wool throughput. Details on grower participation will be announced shortly.

Mr Murray believes wool growers will support the new cooperative.

"Farmers want change," he says. "They're horribly frustrated with the attempts that have happened so far - they want to see change, they don't know how to go about it, and they're sick of hearing about it. What they want is a grower-orientated entity that will instil confidence in wool growers to further invest in their wool clip."

ends

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