By Ewan Pate, farming editor

IN THE wake of the sudden resignation two weeks ago of Rog Wood as a director of the British Wool Marketing Board, the managing director of the organisation has been in Edinburgh to put his side of the argument.

Mr Wood had been a BWMB director for 14 years, representing the south of Scotland, and had recently offered himself for election as vice-chairman.

However, in a shock turnaround he called a press conference on May 23 at which he announced he was resigning in order to clear the way for his involvement in a new Scottish organisation.

He claimed the present BWMB was inefficient and top heavy in terms of personnel and property.

Managing director Ian Hartley and non-executive director Cameron Buchanan have strongly refuted Mr Wood’s assertions and point to what they see as the potentially disastrous consequences of splitting up the BWMB.

At the heart of the argument is what actually happened at an Edinburgh meeting between the three men in May.

Mr Wood, who very recently retired from his farm at Sanquhar following an accident in which his wife was seriously injured by a cow, maintains he called the meeting so that he could outline his plans for streamlining the BWMB.

He claimed that the rejection of these plans pushed him to consider a stand-alone Scottish wool-marketing organisation.

Crucially, Mr Hartley and Mr Buchanan claim, instead, that they called the meeting having been made aware that Mr Wood was already discussing his plans with major wool buyers who were BWMB customers.

They say that they warned Mr Wood of his fiduciary responsibilities as a director and chairman of the audit committee and further considered that Mr Wood would have been subjected to a vote of no confidence had he not resigned.

So much for the internal politics, but what of the BWMB?

It is the only statutory marketing board to survive and although it has not had the ability to offer guaranteed prices since 1992, it does have monopoly purchasing powers with very few exceptions.

Wool is seen by consumers as a luxury item but ex-farm prices are extraordinarily low. A Blackface ewe which costs 80p to 90p to shear will not recoup the cost of the operation in wool revenue.

Low average fleece weights in 2006 and fewer sheep to shear meant a loss of scale.

The UK produced 35 million kilograms of wool in 2006 compared to 48 million in 2000.

Cheap imports from Australia and New Zealand, traded in a much devalued US dollar, weakened the global market and a one-off disaster closed the vital Chinese markets to UK wool for eight months.

A single anthrax case in Wales meant that vets were technically unable to sign the health certificates required by the Chinese authorities.

“We know that radical thinking is needed,” said Mr Hartley.

“We also know that if there was no BWMB there would be no scourers, spinners, manufacturers or traders left in the UK.

“A strategy has been agreed and Rog was very much involved in drawing it up.

“He made the point that the sales activities could be carried out by a couple of people in a portable office and criticised the size of the head office in Bradford.

“However, these premises have been up for sale for 18 months now.

“The main warehouses in Bradford are also to be sold and offices will be incorporated in the replacement premises.

“Our plan is to save £1 million in costs over the next 12 months.”

Mr Buchanan, who is an Edinburgh-based textile agent and industry consultant, added, “The changes will not affect the majority of producers in the way their wool is collected.

“Service level is key and we do not want to reduce it.

“It may, however, be a case of closing depots and replacing them with collection centres.”

Both men were keen to stress the cross border nature of the BWMB’s operations, with wool from the northern English counties being delivered to Galashiels and Scottish clip from the south-west being delivered to Carlisle.

They also robustly answered Mr Wood’s criticisms about the monthly auction system which is employed by the board and the fact that many of the consignments are sold on forward contracts with deferred payment.

“Certainly this involves warehousing but if we didn’t offer these terms the wool would simply not sell,” said Mr Hartley.

“We offer 2.8 million kilograms at each auction and buyers do not have the liquidity to cope with more.

“The proof of the pudding is that currently everything is sold and we have no stock.”

The future of the BWMB is under review by DEFRA and the findings should be published in September.

The days of receiving £100 million a year to subsidise wool may be long gone but there will still be a debate about the need for a statutory board.

Pragmatically, it would be difficult to change the structure to a wool producers’ co-op.

The BMWB has limited assets of around £20 million but in the event of a wind-up that would be completely swallowed up by a pension deficit and any new organisation would need to start from scratch.

A realistic price for wool would help and Mr Hartley pointed out that with encouragement from BWMB, other major producing countries were now willing to promote wool over other fibres in a bid to grow the market share rather than just competing on price at the lowest level.

“We are not in business to be low-price commodity suppliers to China,” he said.