It could take a couple of years to empty the saturated wool supply chain unless some new uses were found but in the interim most companies were focused on the short term.
“Until the pipeline is empty we are not going to see a dramatic change in values.”
Some customers had taken advantage of the low prices and bought 12 months supply of wool.
“That is why the problem will be around for a while,” he said.
The volume of lambs’ wool committed to WNZ contracts had grown by 30% but the value of the assets had fallen 10%.
However, returns to growers had fallen 25% because of “the behaviour of competitors”.
A decade ago the crossbred price was about $2.20/kg. In real terms today it was less than that because of the way wool was sold.
“Farmers can influence the change that is required by controlling where their wool goes, how it goes to market and if they are getting close to the consumer.”
Shadbolt would like to see growers commit to a company and stay loyal for the long term rather than switching for the sake of a few cents.
“What are they doing to invest in the marketplace and what are they doing to change?”
Farms were bought as a long-term investment rather than for a quick dollar so decisions such as who should sell products like wool should be the same.
It took five years to cement a long-term relationship with a customer and much of that work was disappearing as competing sellers looked to make a sale at any price.
A key to turning around the fortunes of wool was to find new uses, although that was a long term strategy, he said.
The space industry had expressed an interest in using wool but Shadbolt declined to provide further details.
WNZ had focused on its technology to differentiate itself, such as the GlacialXT scour technology that enhanced the brightness and whiteness of wool and its direct-to-scour service that accelerated the supply chain to market.
Shadbolt has announced a share issue to growers of one share for every $1 invested in the Wool Marketing Development Commitment levy for the last five years.
He described it as a reward for their support.
In addition, the company named three new directors it said would strengthen its expertise base.
They were Ian Marshall a retired Deloitte NZ partner and independent chairman of the WNZ audit and risk committee, Rebecca Smith, a director of the NZ Story and Lucy Griffiths, the owner Innov8 Aotearoa, a specialist company that helped market food and beverages.
