Price drop puts wool market under pressure

THE sheep wool sector in Wales has been severely impacted by the Covid-19 crisis.

Wool, a natural and environmentally friendly material, is experiencing significant price reductions as the world wool market comes under pressure. Reduced demand and fluctuating currency exchange rates are thought to be the main cause for the downturn, mostly linked to the global effects of the Covid-19 virus.

Wyn Evans, NFU Cymru Livestock Board chairman, said: “As a sheep producer, my business, like other producers, is suffering from low wool prices.

“Sheep need waterproof coats to face the harsh, wet Welsh winter and wool provides just that. However, for welfare reasons, all sheep except wool-shedding breeds need to be shorn annually.

“Wool is a bulky product with significant transport costs, and for many the use of shearing contractors is the only option to clip the wool – both are costs that cannot be avoided. With wool value being very low per kilo for many grades, particularly those from the hills, this process now comes at a cost to the business.

“On a per head basis this may not be large, but the cumulative costs affect the bottom line of an enterprise where gross margins are already under pressure.

“Part of the predicament this year is that due to the Covid-19 crisis there have been fewer auctions and reduced demand. As a result, the British Wool Marketing Board (BWMB) still has around nine million kilograms of unsold stock out of a total 2019-20 clip of 27 million kilograms of wool to sell, so is unable to pay an advance payment for 2020 wool.

“The BWMB has guaranteed that they will continue to take wool from registered producers, and it will be paid for, though this payment will not be coming until May 2021.

“The BWMB applied for a CBILS loan from the Government, something that was fully supported by NFU Cymru. Unfortunately, the board’s application was turned down as they are still considered an ‘arm’s-length’ body of Government.

“This is a disappointing stance as the Government-guaranteed wool prices were stopped in 1993 and we believe that British wool should be treated as a private sector business owned by its producers.”

“The value of wool products also needs to be recognised by consumers, including the environmental benefits of clothes made from natural fibres and their thermal value.

“These are challenging times, but it is important to remember that, through the board, we still have a guaranteed outlet for all wool grades.”