Wool prices unravel in tough year
Many farmers are not covering the costs of shearing sheep after what a wool broker has described as the worst season for 50 years.
In the last year prices for crossbred fleeces have tumbled from $4 per kilogram to $2, and a lot of wool is not being sold. Peter Tate of Fred Tate Wools in Napier said perhaps a third of the season’s production - 200,000-300,000 bales was unsold.
‘‘That’s a bit of a worry because it’s going to hang over the market for the next year. Some people are saying ‘blow it, I’ll keep it in the shed’, others are saying ‘get rid of it, move on’. It’s been the worst for 50 years,’’ Tate said.
The dismal state of the industry is being blamed on a lack of demand from China as well as a failure to promote wool in the face of competition from synthetics. The Chinese still have a lot of unsold yarn from last year so they are not buying. Tate said it cost about an average of $3.20-$3.50/kg to shear a sheep. ’’If they’re shearing full fleece they’ll probably get 4kg of wool off it, that’s $8 so they are going to cover their costs, but this time of the year it’s second shear so there’s likely to be only 2.5kg wool on a sheep. By the time they pay the shearer and all the other costs, they won’t be covering their costs.’’ Tate backed up reports that many farmers were trying to reduce costs by cutting down on the number of shed staff involved in wool preparation. ’’It’s pretty hard to be enthusiastic and spend extra money. People are pretty disillusioned, they just want to get the wool off so it’s a management/ health thing. They’ve lost interest in it,’’ Tate said.
Federated Farmers meat and fibre chairman Miles Anderson said any lambs being shorn this season were at the cost of farmers.
He was like other farmers, and had a lot of wool that has not sold.
‘‘The hope was the price would improve but it’s nosedived. It starts to discolour and then it has to get retested and could be downgraded. Wool hasn’t been playing its part in the sheep story for the last 30 years. Back in the 1980s about 60 per cent of a crossbred animal’s value was in its wool. Now you’d be lucky to get 10 per cent of farm income off wool.’’
There was no easy fix. Resentful that several hundred million dollars of reserves had disappeared from the former Wool Board, farmers had voted down a move three years ago to introduce a 3c per kg levy. Earlier this year Federated Farmers surveyed its members to see what price was sustainable for them. The figure most arrived at was $6/kg for crossbred wool. Anderson said the positive qualities of wool did not appear to resonate with consumers.