The Wool Industry Working Group's latest report holds out little prospect of a change in fortunes for their natural fibre, the latest in a long line of attempts to find new viable markets

The Wool Industry Working Group's latest report holds out little prospect of a change in fortunes for their natural fibre, the latest in a long line of attempts to find new viable markets

The Christchurch wool sale this week did nothing to dispel the gloom that hangs over the industry. While the South Island generally achieves slightly higher returns for its coarse wool than the North Island, prices for both selling centres are languishing around the 185 -190 cents per kg clean.

Fine wool also has reduced by about -35% since the start of the wool season (12 months ago). But it is a mistake to always assume that what impacts on one class of wool has the same impact on the other.

The fine wool clip, coming from merinos and other breeds with a merino influence being used largely for apparel, while coarse wool is used in carpets, although course wool has found other less prestigious roles in the last couple of years such as insulation and for mopping up oil spills.

This report focuses on the coarse or strong wool trade.

Coarse wool has in real terms declined in price for over 50 years with its moment of glory being when the Korean war was underway. Prices were driven up when the USA brought up large volumes to clothe its army through the Korean winters of 1950 and 1951. However, a year later prices fell -53% back to 1950 levels. By 1966 prices were struggling against the competition provided by synthetics which could be manufactured far cheaper.

Since then while there was a period through the 1970’s and 80’s of higher prices they were largely the result of inflationary forces rather than a real demand for the product. The Soviet Union was also a regular supporter at auctions and its demise in the late 80’s also added to the reduced demand.

The graph below shows the relativity of wool against sheep meat over time and the later years not shown only exaggerate the gap even further. Bear in mind the steep growth in the late 70’s and 80’s were driven by leaps in inflation that were curtailed in 1991 by the Reserve Bank Act.

In the last 40 or so years there has been a lot of anguish over how to lift returns of wool, with farmers and industry people alike having the attitude “after all it is such a great product why doesn’t the world want it”.

There have been times when growers have hoped that the consumers supposed move away from plastics to things more natural would drive a return to wool. However, despite a lot of analysis and shuffling of the deck chairs wool has lost its place.

One thing that cannot be disputed is the passion that many sheep farmers have for wool and they are driven to try and find new solutions to lift its value.

The latest report published in July 2020 which came out of the 2018 Wool Summit makes the statement “However, we believe we are on the cusp of a natural fibre renaissance led by more environmentally and socially conscious consumers and that a new approach is needed”. No doubt this is correct, up to a point, unfortunately technology has not only created synthetic fibres which can capture many of the attributes that wool has but now there are plant based fibres being used which are very difficult to distinguish from wool so even the ‘unsustainable waste’ tag levelled at synthetic yarns cannot be used.

I can recall quite a few years ago being told that New Zealand wool (i.e. carpets) wouldn’t be able to supply enough to meet the demand of carpet for all the hotels going up in China. And yet demand for the product was falling.

The reason I was given at the time was that building project managers are driven by meeting budget deadlines and regardless of whether wool was or was not the best product and whether it would or would not wear out in 5 years, the project manager would be gone after the building is signed off and had met his budget. (Wool is rarely the cheapest option). I suspect the same occurs today and the competition has only got stronger.

Latterly of course the COVID-19 shut down of factories, buildings and economies in general has meant wool prices have hit rock bottom (we hope). When any upturn occurs is beyond my crystal ball but prices were heading down for coarse wool before the virus turned up.

The apparel trade has had the additional complication of the USA and China stoush with the USA putting tariffs on apparel coming into the States from China, where a large percentage are made.

The report from the Wool Industry Project Action Group (July 2020) has come up with three recommendations:

  1. Partner with in-market global experts to develop a market-focused investment case and strategic roadmap for the strong wool sector.
  2. Establish the capability necessary to get the sector match-fit and ready for the opportunities ahead.
  3. Establish a strong wool sector governance and coordination group to develop and implement the investment case and strategic roadmap and oversee the executive officer.

The concerns I have is that if this was/is the solution why wasn’t it done before as there have been numerous opportunities. Back in 2006 the Wool Industry Network received $2 million in government funding over three years as a Major Regional Initiative (MRI). The funding was to be matched by $3.175 million in funding from Meat and Wool New Zealand over the same time.

Then in 2014 dissatisfied with any progress being made with wool, a referendum of the 12,000 sheep farmers voted to discontinue with the wool levy. The levy was costing a farmer with 2,000 sheep approximately $297 per year. So hardly an onerous amount but more likely reflected the frustration of numerous attempts to crank up wool demand which have been unable gain any traction. Also, with a 47% voter turn-out comments at the time congratulated farmers on the high response.

As a farmer still with sheep and getting wool carpets in (hopefully before Christmas) I believe this latest report is yet another misguided attempt by passionate folk, supported by Government ,to try and show they care but will go nowhere. If I’m wrong, great but….

A footnote to this is if anyone has any doubts about why wool is struggling to compete, go to the Wool Industry Working Group report as their graphs show what the problem is.

Wool indicator prices

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29 Comments

Everyone I talk to is thinking Wiltshire

Couple I know has half their ewes in lamb to them this year

I think the change over is going to happen very fast, wool industry will contract and shrink to a shell of its former self.

we'll have some Wiltshire ewes to sell next year . into our eighth year of breeding . Spent over 20 years as a shearer , now I've no interest in picking up a handpiece ever again .

Unfortunately the wool action group has no understanding of what a market focus actually means.
KeithW

perhaps they should stop using auctions?

Probably the only way to sell it at the moment.
KeithW

There is wool in nearly every wool shed in the country, an auction in this market is going to find the cheapest price farmers will sell at, which is already below cost of production.

Wool will be good for tipping over hill sides for land stabilization . solve the erosion problem . haha

Andrewj
I agree. But the other option is simply to keep it in the shed. Sometimes it is best to meet the market, albeit with a mix of anger, frustration and disappointment.
KeithW

Surely the market woes could be easily addressed by a simple regulatory amendment of the Building Act, specifying that all insulation products must be fully biodegradable within a 50 year horizon.

Good idea Kate. There are products available but they've had woeful support. You'ld think the Greens would have jumped on this. Same could be said for mandating woolen carpet in all local central Govt builds and refurbs. Alas it's the same sort of commitment we've seen to electrifying the Govt fleet.

I think a lot of insulation is recycled glass, wool growers are up against recyclers giving their old bottles away.

https://www.pinkbatts.co.nz/insulate-your-home/how-do-we-make-pink-batts...

Yeah. certainly makes the product way cheaper. In these days of carbon accounting though you'd think wool would edge glass on that count alone, especially if you counted the carbon from the production of virgin glass all the way through to end use - insulation. Found this link on wool, seems to indicate wool is a nett carbon store
https://nzwool.co.nz/wp-content/uploads/2017/04/Brochure-green-wool-fact...
A kg of virgin glass produces about 1.25kg of CO2 so nett positive

The graphs and trends tell the story I’m afraid. I wouldn’t be holding my breath for more oxygen to appear.

If the sheep meat price falls, stuck with costs associated with wool, times will be very difficult on the farm. Add council regs and who would want to?

Ironic that. Sheep came to NZ to produce wool. Meat was a by product until refrigerated shipping commenced 1882. But wool held its own. Hence the wool barons, Culverden Downs royalty for instance. The United States kept a sheep flock greater than that of NZ up until the late 1950s. This was for military winter uniforms. A lot of NZ wool shipped as carpet yarn to Poland ended up clothing the Soviet military. Not anymore though. On the other side of the equation the splendid Merino fine wool sheep is hopeless for meat yield and quality. If you need to count sheep to sleep you may struggle to find them in sufficient numbers henceforth.

It would be interesting to tally up all the money spent on endless Wool promotion and marketing groups over the last 20 years. They've probably earn't a better return on their time than the people that actually own the wool. For a natural fibre with so many positive attributes it's an indictment on all the so called "promoters" they can't make any headway in securing wool as as a viable asset to the producers. Don't see much of a push from the Feds either to be honest - too focussed on Dairy I guess.

Promotion is not the place where it starts. It starts by thinking about consumers and creating the types of product that they are likely to buy. And that requires creative entrepreneurs. The Wool Industry Working Group starts with a production-led and selling philosophy masquerading as market-led.
KeithW
https://www.interest.co.nz/rural-news/106504/there-are-opportunities-str...

Another good article KW. The products you describe are already available and just need some sort of central championing - aka Govt. Maybe the new wool WG will place lobbying Govt higher on the list than currently appears to be the case

Actually I didn't mean "promoters" in the sense of promoting wool sales. What I meant was all the ongoing and numerous working groups that have been created to supposedly advance the case of wool. be it research into new products, new markets, new ways of selling etc. They've all been a complete waste of funds and done nothing but rehash and regurgitate each others findings in different formats. Little wonder farmers voted to end the levy. In all this time I've yet to see any work going towards reducing the cost to consumers to make wool a competitive alternative to synthetics. Banging on about how great a fibre it is hasn't worked - it needs to be affordable

remember wool equities ? the remainder
of the wool board money all down the drain

Yes, I do recall some crazy ideas that should never have passed muster. The outcomes were inevitable.
KeithW

Market lead by customers. Its hard sometimes to accept what the customers may want and it changes and is fickle. In the end they pay the bills. A2 milk is a great example of seeing food as health. - people are worried about their health and as such will respond to a product which not only feeds them but makes them healthier. All products we produce, I believe, should really aim to be healthy - this is the No1 driver for people.
Wool is tricky but we need to have good honest look at what people want - in some cases they may not want it any more - again hard to accept but maybe a reality. One of the key problems for wool is technology has replaced it with cheaper and as effective, it not more, products. It maybe one of the first ag products that has been a victim of technology. A salutary lesson of what may happen for many products as the world develops technology so fast.

You forgot to mention, along with cheaper comes less sustainable and in some cases heavily polluting junk materials.
So long as people are happy to live with products like the wonderful glass fibre and micro fibre wool will never stand a chance.

Agreed. An effective advert showing the result of holding a flame to micro-fibre vs wool might change some views. Unfortunately the elephant in the room is people's ability to pay - price is paramount, that's why the Warehouse was so successful selling cheap imported rubbish

I agree but the world is full of choices. Vegan leather, made from petroleum chemicals, being pushed by PETA and being used instead of real leather so no animals are harmed but you produce emissions and pollution. Shows what some people value more than something else.

We are very happy with our new (July this year) 100% NZ wool carpet right through the house.

Are the numbers of wool farmers increased? You know...the more supply the lesser the price.