NZ farmers seek control of company

New Zealand’s fine-wool farmers say they are keen to buy out PGG Wrightson’s half stake in the New Zealand Merino Company for more than $7.6 million.

Farmer-owned Merino Grower Investments (MGI) will buy the stake from Wrightson, which is owned by Chinese company Agria, at the end of the month if a shareholder vote approves the deal.

Wrightson managing director George Gould said 630 Merino woolgrowers could gain outright control of the company, which sold about $105 million worth of Merino and mid-micron fibre each year.

MGI chairman Bob Brown said he was confident of shareholder approval, because “this transaction was the realisation of a long-held dream by Merino growers to secure ownership of the strategic direction and future of the business that markets their wool”.

Fine-wool farmers would also be asked to change their constitution to allow shareholding by mid-micron woolgrowers and NZ Merino staff, as executives of NZ Merino had decided to also invest in the business.

Mr Brown said NZ Merino became a market leader when it split from the old New Zealand Wool Board and had since developed a reputation for innovation and building strong relationships in the market.

Merino growers began building an identity separate to the coarse wools that dominated the NZ industry after the Ultrafine Merino Company — a joint venture between AgResearch, 22 South Island high country Merino growers and Japanese wool processor Nippon Keori Kaisha — took advantage of science work done at Tara Hills, a 3340 hectare research farm near Omarama.

A wider grouping of Merino growers decided in 1995 to set up their own body to develop a NZ Merino brand aimed at niche markets.

After woolgrowers adopted recommendations from the McKinsey Report in 2000, marketing and broking activities were passed to the NZ Merino Company, a joint venture of growers and Wrightson, which negotiated contracts with companies such as Icebreaker and Smartwool.