China de­mand buoys wool­grow­ers

Narrogin Observer - - News - Jenne Bram­mer

WA’s 6000 wool­grow­ers are reaping the ben­e­fits of a spec­tac­u­lar resur­gence in the wool price, fuelled by in­sa­tiable de­mand from China and con­strained sup­ply from low sheep num­bers.

The wool price has per­formed well over the past two years, but reached a mile­stone last week when the bench­mark east­ern mar­ket in­di­ca­tor broke through $20 a kilo­gram for the first time.

At this value, WA’s an­nual wool clip is worth $1.07 bil­lion, up from $826 mil­lion in 2016-17, pro­vid­ing a ma­jor boost for re­gional WA.

Jeremy King, 47, a fourth-gen­er­a­tion wool grower from Darkan, 200km south-east of Perth, has seen ups and downs in the in­dus­try, but is con­fi­dent about the fu­ture.

Mr King and his wife Melinda run about 6000 breed­ing ewes and pro­duce be­tween 40,000kg and 45,000kg of qual­ity 18-mi­cron wool each year.

“Things got pretty bad in the 1990s — there were times when we wondered why we were still do­ing it,” Mr King said. “But my father, grand­fa­ther, and I have al­ways had an affin­ity with meri­nos and we hung in there.”

The 1990s were the tough­est, af­ter the col­lapse of the re­serve price scheme, which kept the price ar­ti­fi­cially high but led to over­pro­duc­tion.

Prices hit a low av­er­age of $5.10/ kg in 1998, well be­low the cost of pro­duc­tion, caus­ing many farm­ers to leave the in­dus­try, and the size of Aus­tralia’s sheep flock to shrink.

“Even in the tougher years, I was qui­etly con­fi­dent the wool price would even­tu­ally rise, but I never dreamt it would reach anywhere near what it is now,” Mr King said.

Aus­tralian Wool Innovation chief ex­ec­u­tive Stu­art McCullough said much of the lift was at­trib­uted to China’s ris­ing mid­dle class and their in­creas­ing dis­pos­able in­come.

China im­ports nearly 80 per cent of Aus­tralia’s wool. “The steady rise in de­mand and there­fore price from ex­ist­ing and new mar­kets such as sports­wear give weight to the the­ory that cur­rent prices can last for some time to come,” Mr McCullough said.

Aus­tralian As­so­ci­a­tion of Agri­cul­tural Con­sul­tants WA pres­i­dent Tim John­ston said low sheep num­bers should re­main for the fore­see­able fu­ture.

Na­tional sheep num­bers have fallen from a peak of 180 mil­lion in 1992 to about 70 mil­lion now.

“It is a slow process to in­crease sheep num­bers and there­fore wool sup­ply,” Mr John­ston said. “When sheep prices are so good, sur­plus meri­nos are be­ing sold to meat pro­ces­sors or live ex­porters.”

The world buys wool in US dol­lars and with fore­casts the Aus­tralian dol­lar will stay rel­a­tively low, the ex­change rate also boosts re­turns to grow­ers.

And the strong re­turns are feed­ing through to re­gional WA.

Mr John­ston said more money was flow­ing through lo­cal busi­nesses, as farm­ers rein­vest in their busi­nesses. “More farm in­puts are be­ing pur­chased from lo­cal re­tail­ers, and we are see­ing un­prece­dented de­mand for new shear­ing sheds, shear­ing shed up­grades, as well as new yards and fenc­ing,” he said.

“The de­mand pro­vides em­ploy­ment op­por­tu­ni­ties and sup­ports lo­cal busi­nesses.”

Ru­ral Bank’s Ag An­swers di­vi­sion said the av­er­age sheep farm cash in­come was ex­pected to be 35 per cent higher this fi­nan­cial year than a year ear­lier, which was al­ready a 20-year high.

Mr King, who runs Rangeview merino ram stud, said good wool prices meant his fam­ily were able to pay off debt and up­grade in­fra­struc­ture. They could even ex­pand their oper­a­tion. Like all sheep farm­ers, the Kings are con­cerned about the po­ten­tial closure of the live sheep ex­port mar­ket.

“It hurts me to say it, and I re­ally hope it isn’t phased out, but if we do lose the live ex­port mar­kets, at least we have never been in a stronger po­si­tion than now to have that taken away,” he said.

Pic­ture: Ian Munro

Jeremy and Melinda King from Rangeview Stud near Darkan with their chil­dren Erin, Tom and Gemma.

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