The plan involves a cooperative of Australian woolgrowers using Australia's 1.1 million bale wool stockpile to become the second largest wool processor in the world by acquiring BWK, which is listed on the Frankfurt stock exchange.

Klaus Gyrn, managing director of wool trading house BWK Australasia, told Reuters on Thursday he had heard of the proposal by a group of Australian woolgrowers to use the wool stockpile as collateral to buy into the German-based processor.

But firm proposals had not been put to the Australian arm of BWK, he said.

Australian Broadcasting Corp. radio said the plan was first aired at a meeting of wool industry leaders in Canberra and was being promoted mainly by New South Wales woolgrower Keith Campbell, a former board member of Wool International.

Campbell's reportedproposal would use the stockpile, presently valued at about A$550 million, to buy into BWK, valued by the Frankfurt stock exchange at about DM60 million, or about A$57 million.

Rural Press publication The Land newspaper reported on Thursday that Campbell was currently in Germany attempting to put together a deal.

It quoted Campbell as saying that use of the stockpile to buy into BWK offered growers the chance of taking an active role in selling and processing their product and would maximise commercial opportunities for wool.

Sales from the stockpile by statutory authority Wool International (WI) have been frozen by the federal government, which wants the stockpile privatised by July 1999.

The plan to use the stockpile to acquire BWK has emerged amid a major shake-up in Australia's wool industry, with the board of directors of the main wool promotion authority, Australian Wool Research and Promotion Organisation (AWRAP) and subsidiary The Woolmark Co, sacked by growers this week.

Woolgrowers areangry over what they see as misuse by AWRAP of the A$100 million raised annually by a tax on revenues. The A$4 billion a year Australian export industry should concentrate more on wool demand through processors than on generic promotion, many say.

Campbell's plan is one of five proposals for privatisation of the wool stockpile, Senator Winston Crane, chairman of the Senate Rural and Regional Affairs and Transport Legislation Committee, told reporters in Goulburn earlier this week.

Crane, who is also chairman of the government's Agriculture, Fisheries, Forestry and Conservation Policy Committee, said it was planned that bid proposals would be lodged with the Senate committee on December 17.

A spokesman for the privately-owned Australian Wool Group, which made several unsuccessful bids for the wool stockpile earlier this year, said on Thursday that it was still interested in bidding.

"There's no way AWG is out of the race. We're still working on it," he said.