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Bruce Wills calls on growers to take ownership of the wool problem. It will only go forward with collective investment and support for the 'Campaign for Wool', he says. Your view?

Bruce Wills calls on growers to take ownership of the wool problem. It will only go forward with collective investment and support for the 'Campaign for Wool', he says. Your view?
Wool is a fabulous green product; it is natural, renewable and recyclable. So why is it not sought out by 'green consumerism'?

By Bruce Wills

Wool was once New Zealand’s most valuable and visible export.

It was up until recently what dairying has become today. How things have changed.

If this was about a deficient payroll system for teachers Campbell Live would be all over it like a rash.

If it was about ‘asset sales’ then I imagine Morning Report and shows like 60-Minutes, Q+A, Sunday and The Nation would be pouring detailed scrutiny over it.

The absence of this with meat, but especially wool, speaks volumes about a disconnect between what our media chooses to cover and what drives our economy.

I am not talking about Merino and Mohair, where there is organisation and a collegiality similar to that found in dairy.

The problem child of New Zealand farming is sheep meat and more precisely what we call strong wool - what consumers mostly know as carpet among many other products.

Wool today contributes less than two percent of our export receipts and a soon to be released report by Nuffield Farming Scholar, Sandra Faulkner, paints a sad but accurate picture of it.

“The New Zealand wool industry is currently weak and fragmented to the point of being dysfunctional” she writes; words that could come from the lips of many a strong wool grower.

You get the impression that the ‘Decline and Fall of the Wool Empire’ has been glacial. To some extent is has but the rapid unwinding is stunningly recent.

In pure numbers, our meat exports generated 92 percent of dairy’s export value in October 2004. Wool then was worth 14.4 percent of what dairy generated. In 2004 at least, our meat and fibre exports still outpointed dairy.

Step forward to October 2012 and the relativity of meat to dairy exports has dropped to 44 percent with wool down to 6.2 percent. Today, meat and fibre combined can only muster around half of dairy’s entire export value and it has only taken eight years.

Here is the missed opportunity for ‘NZ Inc’.

If, into last year, meat and fibre had maintained its 2004 relativity to dairy, New Zealand would now be $6.5 billion better off.

Put another way, that sum is only slightly less than the combined exports of crude oil, mechanical items, electrical exports, aluminium, iron and steel.

So can anyone tell me how this has escaped wide scale media or political attention, especially when we are so hungry for jobs and opportunity for our young?

To be fair, Labour and National Ministers for the Primary Industries have tried but this violent unwinding of meat and ‘King Wool’ has not been an issue much beyond the rural media.

I remain astonished the Wools of New Zealand proposal has received so little national news exposure or analysis.

On Monday 25 February 2013, their offer to wool growers will close in what is a farmer version of ‘Dragons Den.’ Wools of New Zealand aims to raise $10 million from strong wool growers to pursue international marketing and sales opportunities.

While $5 million may be enough to get it over the line, farmers, in return, will get a slice of the company and exposure to value-added wool ‘beyond the farm gate’.

In looking forward strong wool farmers like me have a big choice because without a wool levy we can either leave it to chance or take the ram by the horns. Speaking as a ‘farmer’ I have put my money where my mouth is and shared up.

As a ‘farmer’ I challenge my colleagues to call 0800 687 9665 or go to www.ourwool.co.nz and make a decision.

Speaking as the President of Federated Farmers, this is of course your decision in a desperately tough season financially. Money is tight but as I have shown by wools incremental losses it will get increasingly tighter unless we stand united and take our industry back.

Wools of New Zealand is not the only company seeking farmer involvement beyond the farm gate. There is also Elders Primary Wool; a farmer owned cooperative.

For wool growers and indeed our economy this issue is deadly serious when so many young are out of work. It explains why I found it a genuine pleasure writing the foreword to the Faulkner Report. It is provocative and well researched. It rightly looks forward and not backwards because we all know that wool is a fabulous green product.

Wool is natural, renewable and nowadays, recyclable.

Wool has excellent fire protection and health properties. It is also a product that keeps sheep on farms and Kiwis in the type of jobs lost recently in Oamaru. With ‘green’ wool going backwards, it has me asking if green consumerism is real as opposed to being marketing hyperbole.

The Christchurch rebuild after all will need two million square metres of floorcoverings by 2016. What is being done to promote woollen carpets or wool insulation for that matter?

Sheep numbers have halved in the last thirty years as farmers have chosen more viable land use alternatives. Without reasonable returns from wool or meat who can blame them?

I fully endorse what Sandra Faulkner has shown me in her report; the need for collective grower investment, the need to support the ‘Campaign for Wool’, the need for government to do its bit too.

And most importantly, the need is for us growers to take ownership.

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Prices from the latest wool sales are here » and charts for these prices are here »

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Bruce Wills is the President of Federated Farmers. You can contact him here »

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12 Comments

I feel a Fairy Tale coming on.........
'Ónce upon a time there was an organisation called the NZ Wool Board.....

Wool may just become one of those products that are no longer demanded by markets, expensive to produce, and  easily substituted by similar products -- cotton.
 
NZ's biggest competitor in wool markets is OZ -- USD $2.6 bn vs USD$500 mn.
 
Wool industry cannot youth unemployment problem here in NZ. I'd prefer young ppl to go aboard and see the big world. Knowing how to shear a sheep cannot help them compete in the world labour market.

I and especially my wife wear wool and NZ wool where we can.  So its considerably more expensive than Warehouse $5 fleece, well OK....its far nicer though....and really at the budget end you can never compete.
 
regards
 

I am sorry but you and your wife cannot represent even 10% of the world market.
 
Plus, the author talks about corse wool that are normally used to produce carpets.

Hi,
We go for polished floors, but the same thing applies we buy NZ where we can afford to. 
However not that many ppl can afford $250NZD + a sqm, we cant hence polished floors....and NZ's output is that small that the strong wool / carpet output sold to 10% of the world would be a huge win, even 1%.  Made in NZ carpets would also provide jobs....hence why we buy NZ when we can.
regards
 

I am sorry but the wool carpet factory just closed in South Island NZ actually used Japnese tech or were owned by Japnese(?, need confirm here).
 
By just providing raw material not climbing up value chains, I personally see dim futures of NZ wool industry. Same argument might apply to other NZ's agri sectors.

Xingmowang - A number of Kiwi shearers actually shear around the world on a circuit. So this small band of people are already going abroad and seeing the big world. They make good livings and while it is an extremely small amount of money these incomes are brought back to NZ. I would suggest that for some people travelling they rarely leave the cities and tourist attractions and therefore don't get many of the benefits of travel.
 
Sheep still have to be shorn and kiwi's are good workers and respected overseas so this small group of shearers and shedhands are actually brining back offshore income.
 
There will always be a market for Labour of this type offshore.
 
Strong Wool has been seen as a by-product for quite some time by farmers.  The fine wool industry has made some inroads in recent years. How much of the Australian clip sits under the strong wool?
 
 
 
 

Well, I foresee a group of German engineer working with a group of Japanese computer programmers to develope an sheep shearing machine and a mobile application that farmers can use their iphones or Android to shear sheep.
 
Wake up man!!!! It is 21st country. Be a sheep farmer if you want to have a life style not big bucks!

Bruce,
Can you please elaborate on your calculations. It helps to talk in absolute numbers as well as percentages. Could it be that non-meat dairy exports just got a whole lot bigger over the past 8 years by both increased efficiency and also farmers converting from sheep to dairy?
Could you please let me know, because in that case your calculation of the missed opportunity of $6.5b is incorrect. You assumption here is that wool and meat exports have decreased relative to itself and no one has converted from sheep to dairy farming.

 

June Year

1989

2012

Dairy
(NZD$ million)

$1,861

$11,744

Meat
(NZD$ million)

$2,207

$4,546

Wool
(NZD$ million)

$1,398

$650

Forestry
(NZD$ million)

$974

$3,673

Horticulture
(NZD$ million)

$785

$3,042

Seafood
(NZD$ million)

$533

$1,290

Note: real, $NZD mil, base year 2006
 
Pretty clear?

Bruce Wills responds:
 
"What we are looking at is an alternate future.
 
There is nothing to suggest that dairy farmers would not have found ways to lift production should cheaper convertible land not been on the table and the production economics stacked up.  Conversion land has come onto the market due to the underperformance of meat and wool.  We are certain dairy farmerswould have found ways to increase cow numbers and output (if we leave the intensification argument alone examples of this include loose house barns, robotic milking & high input systems).    
 
Due to lower non-dairy land prices, energy and investment went into converting other farms to dairy.   While dairy export volumes more than doubled between 2003/4 and 2011/12, the number of cows in NZ hasn’t; going up 22% instead (NZ Dairy Stats 2011/12). 
 
Efficiency, genetics, husbandry and feed rather than out and animal numbers are also key.  The Waikato, an area where there is no a mass of conversions, further makes this point because average litres per herd were some 31% greater in 2011/12 than in 2003/4
 
It is why I believe dairy, in our alternate future, could still be a $12.5bn export but it is a future where meat also generates $11.6bn and wool $1.5bn.  Confession time; in our interest.co.nz piece we left off casein (for dairy) and hides/leather (for meat).  Including those two categories changes the outcome only very marginally.
 
To show the issue we have with wool returns we needed it to be a $895m export last year just to keep pace with what it earned in from 2004.  Instead it generated $722m so with a ‘green’ fibre like wool we are going backwards (source: RBNZ inflation calculator).     
 
While dairy has found new markets, products and opportunities creating stronger returns for growers, meat but especially wool, has not.  It is a provocative way to represent that argument and to challenge the lack of a national discussion.
 
In terms of how we arrived at the raw data, we used the NZ Overseas Merchandise Trade statistics available off SNZ’s main landing page going back to October 2005 versus October 2012.
 
You maybe interested in the following SNZ Infoshare table (http://www.stats.govt.nz/infoshare/ViewTable.aspx?pxID=66316116-ed75-41cf-8ce2-4e2317e3077c). In 2011 (December 2012 annual is still be compiled), you will see NZ exported more meat, more dairy and even more wool than in 2004 - with the caveat it is 2011 compared to 2004. This is possible due to productivity, technology and better genetics making up for fewer capital stock in meat & wool.  Dairy volumes, you will see, more than doubled but meat volumes were also up 23% and in 2011, even wool volumes were up some 9% over 2004 (the effect of poor growing years and falling numbers is also evident) –this is a long way short of 1995 when wool volumes and value were more than a third of dairying’s. 
 
SNZ has done a really good analysis of wool’s long term decline - http://www.stats.govt.nz/browse_for_stats/economic_indicators/prices_indexes/historical-wool-export-prices-volumes-2011.aspx
 
Hope that proves some answers.

The raw materials prices for "synthetic fibres" are only going in one direction from here on out.