GROWERS WARNED TO LOOK FOR NEW YEAR SURPRISE PACKAGE - 7 January 2010
Woolgrowers who didn’t read their mail carefully in the run up to Christmas may be unwittingly contributing $4.5 million to fund privately-owned Wool Partners International.
Wool Partners International has written to its wool suppliers that from January 14 it will implement a Wool Market Development Fee of 3 percent on all greasy wool sold through auction, contract or direct sale.
The only way out for farmers is to find the form buried at the back of the glossy brochure and to opt out in writing. Otherwise they will see 3 percent of their wool cheque siphoned off into the WPI loss-making coffers.
“It’s all a little bit tricky, or rather trickery,” the president of the New Zealand Council of Wool Exporters, Mr John Henderson said. “This company reported a loss of $3.9 million and we estimate they could raise $4.5 million if all of their suppliers do nothing. Farmers could be funding these losses through this fee. About 95 percent of the wool sold via WPI is bought by the existing exporters who pay for the market development and marketing. Few, if any farmers will get anything for the money WPI is planning to take from them.”
“It’s interesting that WPI hasn’t been prepared to discuss this fee with farmers to see if they would support it but rather, has just imposed it, neatly hidden amongst the Christmas mail with a very short response time.”
Mr Henderson said that the brochure put out by WPI is littered with false and misleading statements and makes claims about the company and its achievements that are simply not true. He suggested that farmers dig the brochure out of the heap of discarded Christmas junk mail and send in the “opt-out” form.
“WPI already charges farmers more than $10 million in brokerage fees and the new marketing fee is to be on top of that. But when WPI auctions wool they don’t own it and there are no marketing costs for them. To suggest otherwise is highly misleading, or worse.”
Mr Henderson said it was ironic that last year growers voted to throw out the compulsory wool levy collected and spent by Meat and Wool New Zealand. It was Meat and Wool New Zealand that sponsored the creation of Wool Partners International.
“I would have thought it is more usual to ask people to fill out a form with their permission to opt in when asking for money, rather saying ‘do nothing and we’ll take it’. It smacks of sharp practice.”
For the average farmer who sells through WPI the fee will cost them an additional $800 - $1000 over and above the brokerage fee, binning charges and any other costs WPI already takes from them.”
Mr Henderson said the move raised a lot of interesting questions around WPI’s formation, loans, cash position and on-going funding. It also raises the question of why all of its suppliers should be made to fund marketing of the miniscule tonnages exported by WPI when most farmers wool is sold and marketed by other exporters.
“Clearly WPI are not in a position to issue a prospectus. That has been promised for two years and has never materialised. A prospectus would enable everyone to see what WPI’s intentions are, where their money is going and have the legal responsibility that goes with raising money from the public. This fee seems to be a way of raising money without meeting the normal requirements that normal companies must comply with.” he said.
Peter Whiteman from Masurel Direct, which runs independent North Island auctions, plus contracts and private buying, said his company would not apply a 3 percent fee for marketing because it was an additional and unnecessary charge on woolgrowers.
“It can’t be justified,” Mr Whiteman said “and there are other options farmers may want to think about.”