By Hugh de Lacy (snr)

The collapse of the Wool Board’s price support system in 1991 led eventually to the demise of the board itself. Farmers had lost confidence in the 55-year-old institution, and the second half of the 1990s had seen it hocking off assets such as the Andar wool-processing equipment company, its Woolfill soft-nops and neps subsidiary and its wool testing company. In a last desperate attempt to maintain a role for itself in the declining industry, the board in 1999 commissioned the American consultant McKinsey and Company to come up with a report on how to improve the profitability of wool to farmers. Such reports had been commissioned by the board on an almost annual basis for the previous two decades, and this one differed only slightly in that it recommended the abolition of the board itself, and the investment of its reserves and assets in research and development.

Laughably, the McKinsey report also recommended that mid-micron farmers abandon the Corriedale and Halfbred and start farming something else.

The upshot was that in 2001, Parliament voted to abolish the board. Its reserves of about $150 million were to be largely returned to the farmers, and its subsidiaries like Canesis and Ovita were to be folded into a publicly listed wool technology company called Wool Equities Ltd. Overseeing the process was the Wool Board Disestablishment Company, called Disco for short.

Farmers did get some of their money back but, while Disco sat on its hands, control of Wool Equities was usurped by Auckland speculators who hocked off all the assets they had inherited from the Wool Board and sank the money into a doomed bio-technology venture called Keratec, which promoted the use of the wool protein keratin in medical dressings. A similar protein could just as easily be derived from chicken feathers.

By 2010 all that remained of the Wool Board was a high-profile court battle between Disco and superfine Saxon Merino farmers led by North Canterbury farmer Peter Radford of the Saxmere and Escorial companies. This was over Saxmere’s claim to a slice of the money that a 1997 Act of Parliament seemed to say the Wool Board should have given it to help with its marketing programme. Disco held out against Saxmere, and continues in existence solely as the repository for the Wool Board’s last remaining $7.5 million, with which Saxmere is to be reimbursed should it win the court case. Incidentally, the case could yet lead to the sacking of no less a figure than a Supreme Court judge whom Saxmere accuses of being unconsciously biased by his indebtedness to one of Disco’s lawyers.*

Whatever happens to the Wool Board’s last stash of cash, a final stake was driven into its heart in 2009 when sheepfarmers voted against continuing the levy which had funded it for half a century. By then what was left of the Wool Board’s work – mainly shearing staff training, and research and development – had devolved onto Meat and Wool New Zealand, essentially the old Meat Board combined with the remnants of the old Wool Board. While some elements of the industry were clearly shocked by the farmer vote on the wool levy, it reflected the final and ultimate loss of confidence in an industry board that had been unable to stem 25 years of falling wool prices. In retrospect wool’s decline was in spite of, rather than because of the Wool Board’s efforts, but the board paid the price regardless.

For all that, the year 2010 sees a guarded optimism within the New Zealand wool industry, similar to that prevailing when the first Golden Shears was held 50 years ago. The difference between then and now is that the reason for the confidence, such as it is, lies in the immediate future rather than the recent past. Shed of the last vestiges of external support, wool producers are falling back onto their own resources, and their efforts are generating some glimmers of hope that New Zealand wool has a future after all.

Superfine Saxon wool is well down the track of a successful branded product catering especially to the high-end apparel market. Finewool producers, working through Merino New Zealand, seem to be making headway in differentiating their product from the vast Australian output that dominates world production. Mid-micron growers have defied the McKinsey Report’s advice that they should turn to something else, and are meeting a fairly steady demand, especially from Asia, for knitting yarns and coarser apparel and furnishing fabrics. And strong – or coarse – wool growers, who produce two-thirds of the country’s clip, are reinventing their carpet wools as a high-end environmentally sustainable and natural commodity in especially the North American market.

As the Golden Shears 50^th anniversary approached, wool prices were showing signs of recovery. In July of 2009, the strong wool median price – the crudest but perhaps most revealing barometer of the New Zealand wool market – had slumped to just 264 cents a kilogram. But as shearers touched up their combs for the 2010 Golden Shears, the price had crept back up to 326 cents. Perhaps this is nothing more than a recovery from the 2007-09 global financial crisis which hit all commodities hard, but there are those in the industry who believe it signals a turning of the corner for the hard-pressed fibre.

The global wool industry has changed massively over the past half-century, with much of the manufacturing capacity having shifted from Europe – and especially the United Kingdom – to Asia, and especially China. North America directly purchases little wool from New Zealand but is an important, and possibly pivotal market for finished products.

North America has been targeted by two farmer-owned companies, Wool Grower Holdings (WGH) and Primary Wool Co-operative (PWC), which are in joint ventures with stock and station firms, respectively Elders and PGG Wrightson, the latter as owner of Wool Partners International. The two companies are pursuing separate branding strategies, with WGH’s strengthened by a technological breakthrough that allows it to trace its wool back to the individual farm. This is a key weapon not only in differentiating New Zealand wool but in exposing synthetics companies trying to pass off their man-made carpet fibres as “natural.” WGH calls its brand Just Shorn, and it seemed to get a positive reception at its launch in February 2010 at the Surfaces carpet fair in Las Vegas.

It’s too early to tell whether these strategies really signal a turning point for the crossbred wool industry, and the underlying fear is that WGH and PWC will inevitably take the same self-limiting route as the New Zealand sheepmeat industry, with several mid-sized companies cutting each others’ throats in overseas markets.

This greatly reduces the returns farmers get for their sheepmeat and beef, and persists even though the two biggest players in the meat industry are farmer-owned co-operatives. They have so far resisted demands from their farmer-owners and politicians alike for them to amalgamate. WGH and PWC have actually talked of merging but, as in the meat industry, the talks show no signs of progress towards an amalgamation which could see wool producers united in marketing their production overseas, instead of battling each other there and at home.

The weakness of both the wool and meat marketing structures has ensured that, throughout the first decade of the new millennium, the decline in sheep numbers continues, perhaps even accelerates. By June 2009 New Zealand had  just 32.4 million sheep, a 5% decrease on the previous year. Sheepfarm numbers too have fallen, to a projected 12,900 this year. More significantly, shearing costs now eat up half the farmer’s wool-cheque, compared to 15% 30 years ago. On many meat-and-wool farms wool has become at best a by-product of lamb and beef production. At worst, shearing has come to be regarded as an animal health exercise rather than a revenue-generating one.

The shift in focus for sheepfarmers from wool to meat has seen a major change in the breeds of sheep that shearers are dragging across the boards. The trend was signalled as early as the 1970s when the first flock of Wiltshires was established in the Wairarapa. With a lambing rate of 200% and a big meaty carcase, the Wiltshire will simply shed its fine and bulky wool if left unshorn, and a sheep that doesn’t have to be shorn bodes ill for the wool industry.

The switch to meat accelerated in the 1990s with the arrival of high-fertility breeds like the Finnish Landrace from Finland, and the East Friesian from northern Holland and Germany. Since the year 2000, big meaty breeds like the Texel from Holland and the Dorper from South Africa have contributed to a muscling up of the New Zealand sheep flock, and seen the emergence of composite types like the Kelso whose focus is almost solely on meat production.

Today the national flock is less easy to classify by breed  than it used to be, but the reliable old Romney still comprises about 40% of it. Perendales comprise another 10% and Coopworths 12%. The Corriedale flock has shrunk to under a million (2.5%), and Halfbreds cease to register in the statistics. Merinos comprise about 5.5%. The big gains in flock share have been the mixed breeds, including composites, which comprise some 13.5%, and a general category of “other breeds” which comprise 16%.

Whatever the state of the New Zealand wool industry in the Golden Shears jubilee year of 2010, there seems little doubt that shearing will go on forever. The one aspect of the old Wool Board activities that looks certain to survive is its shearer and woolhandling training, which has lately been carried on by the industry training organisation Tectra. It has the goal of turning out 800-odd new shearers a year to cushion against the 600 who leave the industry.

Shearing has become a great way to see the world and get well paid for it. New Zealand shearers routinely travel overseas to work in countries such as Australia, Norway, Italy, Ireland and France, as well the United Kingdom. In the latter labour market they’re accorded special access and work permits, because without them the British flocks wouldn’t get shorn. New Zealand contributes to this free-roaming lifestyle by listing the occupation of shearing on its immediate skills shortage list, meaning overseas shearers are actively encouraged to come and work here.

The tale of the wool industry in New Zealand over the past 50 years may be one of declining fortunes and sheep numbers, but there are still over a billion sheep in the world, and it’s quite possible that new markets may open up for New Zealand shearers’ skills. China, with whom New Zealand has a free trade agreement (FTA), has the world’s largest flock at nearly 150 million, and India, with whom New Zealand is negotiating an FTA, has nearly 60 million. Australia has 69 million, the former Soviet Union 55 million, Iran 50 million and even the Sudan, with 40 million, has more sheep than New Zealand.

The Golden Shears 2010 will demonstrate once again that New Zealanders and the New Zealand way of shearing are by far the fastest and most efficient way of separating the sheep from its fleece. Globally and in this country, sheep are never going to go away: mankind has been farming them for millennia.

And now, as always, somebody’s got to shear them.

*The Supreme Court Judge in question was indeed soon removed from office, but Saxmere lost the court case which revolved around Saxon sheep being a distinct – smaller, and finer-woolled – sub- species of merino, its genetics long since fixed in Germany where the merino’s were in Spain. The last of the Wool Board’s stash of cash has since been dissipated, but as recently as 2016 there were still a couple of hundred thousand dollars sitting in a bank account waiting for a home.