Two farmer co-operatives have decided not to join forces.
Primary Wool and Wool Grower Holdings have been in talks about forming a single co-operative since last year.
Primary Wool is a partner with Elders New Zealand in a venture to supply New Zealand strong wool to the top-end US carpet trade under the new "Just Shorn" brand.
Grower Holdings is in a joint venture by Wool Partners International with PGG Wrightson, which also targets the international carpet market with its "Laneve" brand.
Primary Wool chair Bay de Latour of Hawke's Bay says having competing wool co-operatives in a divided industry was upsetting many farmers.
But he says they have not been able to agree on a combined way forward.
"We had to be sure that we won't put our shareholders at risk and the outcome would be viable," he says.
Mr de Latour says Primary Wool will continue to focus on repositioning wool in the marketplace to increase returns to farmers.
Wool Grower Holdings chair Jeff Grant, says it's a tragedy the two co-operatives haven't been to come together for the benefit of the struggling industry.
Mr Grant says Wool Grower Holdings will continue working with PGG Wrightson on establishing a marketing company, but is also leaving the door open for talks with Primary Wool.