[OPE] Cartellization....

WSJ February 2, 2011,
New Zealand Farmers Plan Wool Cartel
By Lucy Craymer

(...) a group of New Zealand farmers
plan to create a cartel to reverse falling profits and boost prices for wool
used to make yarn for carpets.

The Wool Partners Co-Operative is offering farmers shares in return for
their "strong wool" fleeces in an effort to corner 16% of global supply and
wield power to control prices. The group hopes to replicate the success of
Fonterra Co-Operative Group Ltd. a milk cartel created a decade ago in New
Zealand that has grown into the world's biggest processor of dairy products.

"It will consolidate and restructure the wool industry in New Zealand
because it's in a very fragmented state and up until the last six months
farmers have had declining returns over 25 years," said Mark Shadbolt, vice
chairman of Wool Partners.

Shadbolt hopes the cartel will help hard pressed farmers cope with the
decline in the global wool trade as the development of cheaper synthetic
materials has challenged wool as the main source of yarn for rugs globally.
To be sure, wool prices globally have risen 60% in the last six months on
the back of strong commodity prices but returns for New Zealand's sheep
farmers remain significantly below those in the dairy industry. Sheep
farmers get a return of 86 New Zealand dollars (US$67) a hectare, compared
with NZ$1,470 a hectare for dairy herds, according to New Zealand's Ministry
of Agriculture and Forestry.

Falling profits for sheep farmers have seen the nation's total flock halve
to 32 million animals over the past 25 years, with the wool industry
accounting for 1.5% of the country's export revenue, or NZ$625 million. The
plight of New Zealand's sheep farmers is mirrored around the world with
flock numbers down 10% to 1.07 billion since the peak in 1989, according to
data from Food & Agricultural Organization of the United Nations. (...)
http://blogs.wsj.com/economics/2011/02/02/new-zealand-farmers-plan-wool-cartel/?KEYWORDS=cartel

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Received on Sat Feb 5 18:24:30 2011