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Wool industry restructuring timetable approved

Wool industry restructuring timetable approved

The Wool Board Restructuring Bill will be introduced into Parliament by the end of November, Agriculture Minister Jim Sutton said today.

Mr Sutton said that Cabinet ministers had approved plans to dissolve the Wool Board and to put its assets into the hands of growers through a range of industry-good and public-good organisations.

He said a bill would now be drafted, and it would be introduced into Parliament by late November and referred to the Primary Production Select Committee. Submissions on the bill could be called before Christmas, and the Government would aim to pass the bill by early May next year.

Mr Sutton said that the wool industry had been in a state of considerable flux and uncertainty for several years now.

"I hope that this decision will give the industry a direction to work together towards."

He said the wool industry was a significant industry for New Zealand, earning $943 million of export earnings in the year to March this year.

Under the proposal approved by Cabinet, the Wool Board Restructuring Bill will convert the Wool Board into a company (currently called Disestablishment Co, or DisCo) that would take over the assets and liabilities of the board. This company would continue to collect a levy on wool for industry good purposes till 30 June 2004, or till a SheepCo commodity levy comes into force.

SheepCo is a non-profit organization set up last year to fund research and development.

The assets of the board will be allocated to woolgrowers who farm more than 250 sheep as shares in Wool Equities Ltd and Merino Grower Investments Ltd, based on sheep numbers farmed.

Shares will be allocated on whether growers have merino sheep (MGIL shares) or other sheep breeds (WEL shares).

Trading in those companies will be restricted for two years, and no grower will be able to hold more than 5 per cent of total shares.

The Wool Board will provide a restructuring plan to Mr Sutton for approval, which will include a share allocation plan and the constitutions of both proposed companies.

Mr Sutton said there were taxation issues around the wool industry's restructuring proposals, and these would be worked out between himself and Finance Minister Michael Cullen using other producer board reforms as precedent.

He said the wool industry restructuring met the Government's criteria for producer board reform, as it was supported by the majority of industry participants, it was fair to minority interests, and it was in the national interest.

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