Agriculture Minister David Carter says he worries that farmers who have dumped wool levies as a way of paying for "industry good" work have not thought through the implications for the sector.
"Farmers not to support the continuation of a wool levy is disappointing and will create difficulties for the industry," the minister says.
"The result ... effectively leaves the wool industry without a mandated industry-good body at a time when this is desperately needed".
He says the wool sector will now have difficulty accessing funding from the Government's primary growth partnership initiative.
"I am concerned that the wool industry now finds itself in such a vulnerable position".
Woolgrowers voted 44,193 to 35,968 - split 55.1% in favour, and 44.8% against - in a weighted vote according to their number of livestock.
They rejected the levy of 4c/kg, reducing later to 3c/kg in a vote on a one-farmer, one-vote basis: 2794 (45.76%) in favour, and 54.2% against.
Overall, fewer than 40% of eligible farmers on the electoral roll voted.
The farmers' rejection of a $6.4 million levy - plus another $5 million of taxpayer funding that their industry board, Meat and Wool New Zealand was going to access - will trigger a restructure of the board.
Existing funding will run out on April 18 next year.
"When the board meets this week, we will be looking across all current and planned activity areas to consider the implications," says Meat and Wool NZ chairman, Mike Petersen.
One of the bodies which will lose part of its funding is Sheep Improvement Ltd (SIL) which works on the genetic improvement of the national flock, providing a performance recording database.
This database has been a key factor in the increasing use of genetic tools, and Petersen says the board will need to look at how that shortfall will be made up.
Also lost will be the wool sector's contribution to the training of shearers and woolhandlers, which meant trainees only had to pay a small fee.
"It will be interesting to see who picks up this investment, if at all," he says.
"The whole activity is at risk".
The Meat and Wool NZ Economic Service would continue to be viable, but its collection of wool data will be phased out over the next six months.
"The existing data is extremely valuable to enable the provision and analysis of information, and the relevance will drop quickly once it is not being updated," says Petersen.
The economics database goes back over 30 years and is the nation's only collection of that information.
Petersen says directors and executives will meet this week to look at the implications of the "no" vote on operations of monitor farms used to transfer technology to the wider farming sector.
"No decisions have yet been made."
Similarly up in the air is the future of on-farm research, which in previous years has included internal parasite programmes, forage and crop research, clover root weevil and facial eczema monitoring
The board will continue to look after wool interests until April next year.
Federated Farmers meat and fibre chairman Bruce Wills says with the wool industry in crisis "it is up to the commercial players in the market to step up".
But Wool Exporters Council executive manager, Nick Nicholson says the vote shows the industry board does not have a woolgrower mandate to "tinker in the commercial parts of the industry".
Nicholson says the "farmer good" activities such as research, shearer and woolhandler training, and monitor farms have been valued by farmers and the wider wool industry.
He says the wool levy proposal provided for more than 50% of levies to be spent on "ill-defined market development".
"Woolgrowers have been down that track before."
