Wools of New Zealand (WNZ) is reporting more demand for wool carpets.
It is thought around 2,100 farmers will get to vote on the deal. Ahead of the vote, Primary Wool Co-operative will become 100% owner of CP Wool with the purchase of Carrfields Ltd's 50% shareholding.
Carrfields will concentrate on the specialist manufacturing of wool and hemp products through its majority ownership of the NZ Natural Fibres business alongside Hemp New Zealand and the other minority shareholders.
"These moves are the outcome of yearlong talks between Carrfields Ltd, Primary Wool Co-operative and WNZ, which collectively handle 37% of New Zealand's wool clip," says James Parsons, chair of WNZ.
"Growers have been asking for consolidation and now they will get the chance to have their say. Together, we can deliver the vision and scale required to make a real difference to New Zealand's struggling wool industry."
Primary Wool Co-operative and director of CP Wool, Richard Young, says the proposed merger marks the start of an exciting chapter for the wool sector. He believes it will act as a launch-pad for New Zealand to truly realise the full potential of wool.
"This proposed combined business will enable both businesses to realise their potential as a single grower-owned entity," Young adds.
"For CP Wool suppliers, it will be the link to greater customer intimacy via the Wools of NZ market-focused strategy. For Wools of NZ growers, CP Wool will bring the engine with its large bale numbers and network of stores that allows that strategy to come to life."
He says the boards of both the Primary Wool Co-operative and Wools of NZ have been working since late last year to answer the demands of growers for consolidation and develop a strategy to lift strong wool sales volume and price.
"The merged organisation's strategy will be underpinned by a shift from wool as a raw commodity to grower-owned and branded consumer wool products."
"Ultimately, the development of an integrated supply chain aims to improve returns for our growers."
Craig Carr, managing director of Carrfields and chairman of CP Wool, says the wool industry needs leadership, investment and a strategic focus to deliver better outcomes for long term participants.
"Carrfields has decided that supporting the joining together of the two grower organisations and turning our attention to investing in the future development of wool and hemp products makes good sense strategically.
"In the current fast moving environment, we want to ratchet up our activity through NZ Natural Fibres and we have a number of exciting opportunities in front of us.
"Also, Carrfields will continue working with our international brand partners in its ongoing drive to develop new markets for wool."
Growers will be able to find out more via a nationwide road-show begininning in early August.
Primary Wool Co-operative Limited was formed in 1974 by a group of Hawke's Bay farmers to increase the returns for wool growers. Over the ensuing decades, its membership has grown to over 1,400 right across New Zealand.
Wools of New Zealand is a 100 per cent New Zealand grower-owned supply, sales and export marketing company with 730 grower shareholders representing approximately 14.5 million kilograms of annual strong wool production.