Our organisation
Background and History
Merino NZ Inc and NZ Merino Co Ltd
Funding

Merino Inc is a 100% grower owned industry good body representing all merino growers. It is focused on providing benefits to all New Zealand merino growers.

Merino Inc provides the following services:

• Applying growers' funds to leverage the provision of research, training and technology transfer;
• Creating and managing an information dissemination network;
• Providing merino growers with regular communication on industry issues and Merino Inc research & development activities;
• Acting as spokesperson for merino growers on industry wide issues;
• Promotion of the merino breed; and
• Owning and managing the New Zealand Merino brand.

Our overall objective is to improve grower efficiency and productivity, and therefore profitability, through excellence in the services we provide.
Our specific objectives are:

• To reduce on-farm costs;
• To improve the performance of merino sheep and fibre;
• To deliver cost-effective technology transfer and training services to meet the needs of growers;
• To acquire, develop and organize a collection of information resources for growers; and
• To provide leadership on merino industry issues.

Merino Inc has three key pillars of service:

• Research, Development and Innovation
• Education and Training
• Advocacy and Industry Communication

Merino Inc undertakes research, development, education and training in the merino sector, focusing on on-farm activities and merino fibre issues.
To support its research and education roles Merino Inc:

• Co-ordinates a partnership approach to research, development and innovation, and education and training, between Merino Inc and other industry participants; and
• Provides funding on a contestable basis to research, development, education and training service providers.

Merino Inc is the advocacy body on behalf of the industry, and also provides regular reports to growers on progress and results of Merino Inc research and development activities.

To support its Advocacy and Communication service Merino Inc:

• Acts as the spokesperson and representative on behalf of all merino growers on industry wide issues.
• Has a designated animal welfare spokesperson
• Focuses on maintaining the 'club' of growers through regular communication with growers.
• Liaises with regional associations, stud breeders and other industry groups.
• Communicates with growers on industry issues and Merino Inc research & development activities.
• Maintains strong working relationships with growers, service providers, and other industry stakeholders.
• Promotes the merino breed.

The Merino industry has adopted a policy of a 'one-voice' on all animal welfare issues related to merino growers. The current industry spokesperson is Ross Beech. Any enquiries related to animal welfare are directed to Mr Beech. Merino Inc also has regular lines of communication with the MAF animal welfare division and NAWAC.

Use of the brand in textile, yarn and clothing classes is exclusively licensed to The New Zealand Merino Company Limited for a period of fifteen years for no fee, after which, provided the Licensing Agreement conditions are met, ownership in those classes will transfer to The New Zealand Merino Company Limited. Use of the New Zealand Merino brand in other classes has not been licensed, and it could be made available as appropriate.

Merino Inc makes funds available on an arms-length and contestable basis to service providers who submit suitable projects in line with pre-established criteria and priorities. Approval of any funding is at the discretion of the Merino Inc Board, and is subject to available funding and priorities from time to time. Should insufficient acceptable projects be available in any given year, any surplus funds will be carried forward to the following year.

Where commercial benefits emerge from projects undertaken, Merino Inc will facilitate negotiations with the service provider and other appropriate industry participants who wish to commercialise the "product".

Merino Inc also seeks to be the liaison point to ensure that the generic research and development funds channeled from merino growers MWNZ are used in programmes that are clearly of benefit to the merino industry. Merino Inc acknowledges that these are likely to be shared across the total wool industry but insists upon accountability.

As an industry-good organisation Merino Inc recognises that programmes funded from compulsory levies should overall benefit those funding it. Some projects may target specific groups of growers, but on balance the portfolio of projects should provide benefits to all growers. Where an application is targeted at a specific group of growers, other complementary projects must exist to benefit other non-targeted growers in the same priority area.

Therefore Merino Inc assesses funding applications using the following criteria. Projects are required to meet as many of the following criteria as possible:

• Benefit a majority of growers, or where an application is targeted at a specific group of growers other complementary projects must exist to benefit other non-targeted growers in the same priority area;
• Have technology transfer application;
• Have a quantifiable value and benefit to the industry;
• Capable of having a wide impact on the industry;
• Addresses significant issues;
• Support the Merino NZ Inc vision of a profitable and expanding merino industry;
• Offer an innovative approach;
• Support other industry initiatives;
• Look forward to future needs and issues;
• Relevant to individual growers, and supported by growers;
• Support the current industry infrastructure;
• Offer the opportunity for leveraging funds through other agencies;
• Be provided by a credible service provider with credible personnel involved;

Merino Inc has a Board of Directors of up to six members. Four of these members are elected through the regional associations; Otago, Waitaki /Mackenzie, Canterbury, Marlborough & North Island (one representative). Under the Merino Inc rules, two director positions are contested each year.
The elected representatives have the option of co-opting up to two additional directors with skills appropriate to the needs of Merino Inc. At present there are no co-opted directors.

Merino Inc holds an AGM each year, usually in July. At the AGM financial and research reports for the previous year are presented as well as the research and training program and budget for the next year.

Merino Inc employs on contract on an as-required basis a suitably qualified team to manage the business of Merino Inc. The present team is:

• Lisa Anderson, Research & Development Manager, who is responsible for developing policies, managing relationships with other organisations, and providing linkages and systems to ensure that research, development and training are well-planned and efficiently executed.
• Graham Brown, Financial Manager, who is responsible for budgeting, accounting and other financial management, and acts as the society's secretary.
• Allison Brook, executive secretary, provides administration support.
• Jo Jermyn, Communications Manager, who is responsible for maintaining the communication between Merino Inc and all merino growers, through newsletters, website, email contact, and for facilitating the transfer of any research reports relevant to growers.

The responsibilities of this team are to:

• Develop working functional relationships between Merino Inc, Growers, the MWNZ, service providers, and other stakeholders;
• Ensure growers are informed and consulted with on industry wide issues, and act on behalf of growers when necessary;
• Ensure a balanced portfolio of projects is implemented;
• Co-ordinate a partnership approach to projects undertaken;
• Review projects and progress on projects;
• Make funding applications to other funds, for Merino Inc programmes; and
• Ensure adequate financial and risk management procedures are implemented.

Merino Inc team - Jo Jermyn (Communications), Lisa Anderson (R&D), Simon Cameron (Waitaki/Mackenzie), Tom Rowley (Chairman, Otago), Brian Hansen (Canterbury), Simon Harvey (Marlborough/NI).

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In 1995, Merino growers decided to influence their own future by forming an Incorporated Society, Merino New Zealand, which had the role of facilitating industry programmes for research and development and marketing for the sustained profitability of all growers.

The key focus of Merino New Zealand was to lift New Zealand merino fibre out of the "commodity bucket", to differentiate the fibre from its competitors, to develop a unique 'New Zealand Merino' brand aimed at specialist market niches, and to develop research and development technology transfer programmes. Merino New Zealand assumed the marketing, promotional and research and development activities for fine wool previously undertaken by the Wool Board, and entered into a contract with the Wool Board to receive funding for its programmes.

Merino New Zealand Inc. was originally conceived as being the parent body of the Regional Merino Associations. However the Regional Associations are all independent Incorporated Societies in their own right but have a close liaison with Merino Inc.

The McKinsey Report was commissioned in 1999 because of New Zealand wool grower dissatisfaction with the existing industry strategies and structures and increasing concern with the declining profitability of wool growing. It delivered a series of recommendations through which the New Zealand wool industry could successfully position itself for the future and was adopted by the majority of growers in 2000.

The McKinsey Report made a number of recommendations that have had a direct impact on the merino sector:

• That the current marketing activities of Merino New Zealand Limited be transferred to a commercial marketing entity;
• That the current research and development activities of Merino New Zealand Limited be transferred to the industry good body Merino New Zealand Incorporated; and
• That research and development activities be funded by a 1% compulsory levy on all wool and meat sold.
• That ownership of the New Zealand Merino brand revert to Merino New Zealand Incorporated.

In respect of research and development, the McKinsey Report also acknowledged that:

"Merino growers have unique concerns, and focus much less on meat. Many projects of relevance to meat producing growers have little benefit to merino growers". The McKinsey Report therefore recommended that 75% of the levy collected from merino growers be directed to Merino NZ Inc to be utilised for projects of value specifically to merino growers.

With the implementation of the McKinsey report The Merino New Zealand Company was formed. This company is 65% owned by Merino Grower Investments and 35% by Wrightson Ltd. Merino Grower Investments holds shares in the name of all Merino Growers. Merino New Zealand Inc. continued with funding, as recommended by McKinsey, from the Wool Board, until the restructuring in 2003.

In June 2003 Merino Inc reached agreement with the Wool Board to receive approximately $2.1 million in unspent levy funds collected by Wool Board from merino growers to carry out industry good functions. Under the agreement Merino Inc is required to report annually to growers on the activities carried out using these funds, and to summarise the proposed expenditure of the next year. Merino Inc may not materially change its primary objectives while these funds remain.

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The NZ Merino Company Ltd is a wool broking and marketing company. It is a commercial company that sells and markets wool for clients. It aims to make a profit for its shareholders (MGIL and PGG Wrightson). Clients pay a marketing fee, which is a commercial arrangement.

MGIL (Merino Grower Investments Ltd) holds shares distributed to merino growers as part of the Wool Board dis-establishment process. The role of MGIL is to monitor the performance of the Merino Co and act as a sounding board and guardians of merino grower interests in Merino Co, including the power to appoint four directors.

Merino NZ Inc represents all merino growers. It is an incorporated society. Its funds come from compulsory levies paid to, initially, the NZ Wool Board, and since it's disestablishment, Meat and Wool New Zealand.

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Merino Inc was funded from wool levies, collected by NZ Wool Board. About 65% of levies collected from merino growers were allocated by NZ Wool Board to Merino Inc to manage for merino specific projects. All expenditure was approved by the NZ Wool Board.

On the disestablishment of the Wool Board in 2003 remaining levy funds allocated to Merino Inc, but unspent, were passed over to Merino Inc. The use of these funds is limited by an agreement signed between the parties at that time.

In 2004 Meat and Wool NZ became the new collection organization for the meat and wool levy monies. Merino Inc applied on an annual basis for funds from Meat and Wool NZ to fund research, development, education and costs associated with administration of Merino Inc.

In April 2010, the wool levy will no longer be collected. Merino Inc will then need to spend the levy reserves that are still held for any future R&D.

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