Wool ‘chutes’ for the stars
Released 25 Jan 2011
By Don Nicolson, Federated Farmers President
Imagine if we had a new green export that could generate over $600 million each year - $100 million more than The Hobbit's economic contribution. Imagine if this export was 100% Pure and derived only from natural, renewable sources. This wonder product exists and most folk will know its unreconstructed name - wool.
Wool's decline was perhaps due to naivety and complacency. While farmers poured millions into the old wool board, oil based fibre manufacturers and their lobbyists were cutting off markets faster than an oil slick in the Gulf of Mexico. Got a polar fleece? You're wearing oil. Now oil based fibres are on everyone from backpackers to All Blacks supporters, but could wool be on the greatest comeback since Graham Henry retained his coaches' job? Adjusted for inflation, wool ought to be a $2.8 billion industry but despite its green credentials, a low point was reached several years ago with exports worth only a fifth of that. That's still more than a Hobbit each and every year and without the massive subsidy.
Out of all industries in New Zealand, agriculture is probably unique because we farmers directly contribute to research and development every time we send animals or milk for processing. Yet despite this, or, maybe because of it, wool became divorced from reality. It was no surprise farmers called time on the wool levy two years ago. Returns for strong wool had reduced so much, it had almost become an animal health by-product. The reaction from some members of the Royal Society and commentators was visceral, but since the levy's total demise last year, strong wool prices have crept upwards. We've seen HRH The Prince of Wales' global wool project and our exporters are doing the hard yards with branding and product development.
So full marks to Government for joining with industry to invest $17 million on wool research. Wool is like a Hobbit each and every year and the taxpayers share is a fraction of what we're putting into that movie. Jeremy Moon's Icebreaker provides a fine wool example over how private enterprise can radically reinterpret products. Maybe it's also time for a ‘Wool-X prize' modelled on the X-Prize Foundation ‘making the impossible, possible'. The word prize is key - Virgin Galactic is now a commercial evolution after Burt Rutan spent US$25 million to win a US$10 million prize to create a cheap and reusable space vehicle. Could a Wool-X prize similarly inspire enthusiasts in sheds and the world's biggest universities? If we retained the intellectual property it could unlock new mass market products and industries. It's about unleashing competitive instincts and competition is no bad thing. Competition provides an edge we've increasingly lost as a society and Auckland Grammar's headmaster may be right to place less emphasis on NCEA.
We also need better market research than policy by cliché. It's automatically assumed ‘Brand New Zealand' is all-conquering. But not according to Otago University research conducted in the UK. This found a gulf between what consumers said and what they actually bought, or as television's House would put it, ‘everyone lies'. "Made in New Zealand" was only a small reason for buying and while we're on a par with Spain, we're only slightly ahead of American goods. This research needs to be expanded upon because 69 percent of the buying motivation wasn't clean and green but ‘value for money' and ‘reliable brands'. We need to get past the assumptions of policy analysts and politicians to find what our consumers really value. That's also a sure fire way to grow wool into a $3 billion export.
