A case of history repeating - at huge cost

Theresa Gattung ... shouldn't growers be entitled to know figures?

15-12-2008 | Alan Emerson

I found Alan Williams' article on Wool Partners International last week fascinating. It quoted WPI chair, Theresa Gattung as saying that estimates of a $650,000 salary for the CEO and $350,000 for the chair as being "too high". By how much or what the salaries actually were, Gattung didn't say.

I strongly believe farmers have a right to know but sadly it is part of a general attitude as far as the so called wool reforms are concerned. It seems the mushroom treatment rules.

I phoned some large farmers, both here, in the Manawatu and Taranaki to ask them what they knew of Wool Partners International, (WPI), Wool Grower Holdings, (WGH),and how much farmers had been committed to with the purchase of PGG Wrightson's wool assets.

Unsurprisingly none of the farmers I spoke to had the faintest idea, which is an indictment on any "consultation" process. Worse, I would argue, it is a sure sign that there is absolutely no farmer buy-in for any of the activities that have or are taking place.

Information is actually quite difficult to come by. Whereas WPI has a website it is not the easiest to find, amazingly WGH doesn't. Go to the Meat and Wool website and WGH is mentioned twice, once regarding the PGG Wrightson wool initiative and another the windup of Wool Industry Network (WIN) and the subsequent direction WGH will take.

It all started with the Wool Industry Network who came out with a hiss and a roar and a bench of little known consultants. They produced, with government help, an initial report that I considered average. They then released a glitzy report earlier this year entitled a "Model for Change". It talked about a farmers' co-operative with a marketing arm and came out with an impractical time line for consultation of March and April this year.

Then in May farmers were told that we had purchased PGG Wrightson's wool business for $46 million. PGG Wrightson was to hold "up to 40% of the new entity". The $46 million consisted of a $10 million up front payment, $20 million in equity and a $16 million loan. On the WPI website you can read PGG Wrightson actually owns 50%,so who knows?

Were we asked or presented with a credible business plan to support the purchase? No. We do, however, collectively owe, by my maths, $26 million.

Further go to the WPI website which tells you little other than giving the contacts of 30 wool representatives which is "the largest procurement team in the country". So as well as the $26 million we have the contingent liability of 30 wool representatives and the backup staff.

Was there any meaningful consultation or a credible business plan to justify saddling farmers with that debt and liability? Again, no.

We are then told that James Aitken would chair WGH. How was that decided, was the position advertised, were any consultants used? We, the farmers, don't know. You could ask the same question about his fellow directors Sir Brian Lochore, chair of the failed Growerco, and Keith Sutton who on his website mentions, inter alia that he is on the board of both WIN and Wool Equities Ltd.

For WPI we have the high profile Theresa Gattung as chair and Iain Abercrombie as CEO, along with WIN CEO, Mike Jones as general manager - commercial, all, inevitably, at great expense.

Again, were farmers consulted, did we have a business plan and what expertise did whoever made the appointments think both Gattung and Abercrombie had to add value to our wool clip? No-one I spoke to had any idea.

At this time of year farmers are frenetically busy and consultation is pointless. From the early days of WIN, however, the powers that be have had two years to develop a business plan, present a case and encourage debate and, with it, buy-in.

This hasn't been done and farmers are responsible for two boards, some extremely expensive individuals, 30 wool buyers and their support and, by my maths, $26 million of debt.

I have two issues with the entire process, one is the lack of consultation, debate and total absence of any business plans and with it farmer buy-in is a scandal. Second is that reading "Wool - a History of New Zealand's Wool Industry" we have done all this before - several times.

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