The Feds are talking up prospects for wool, but after many attempts at revitalising this great product the statistics illustrate wools lack of earning power in a sheep gross margin.
Wool prices are easing back rapidly now, and the gains of the past year are being eroded weekly (now coarse wool indicator is 128c/kg back from last March's peak).
Which is not surprising, as marketing and promotion are a thing of the past, and it appears wools future relies on a much reduced supply to drive demand.
Farmers, after many failed attempts seem unwilling to invest any more money in future restructuring and the growth in sheep genetics seems driven by meat attributes.
Share with us your views on wool's future. Have you given up on selecting for wool when choosing rams and replacement stock?
Federated Farmers believes wool could be NZ's "sleeping export dragon" but statistics, an Invercargill woolbuyer and sales figures do not agree. Wool's export value had increased 31.5 per cent, compared with last year, said Fed Farmers Meat & Fibre chairwoman Jeanette Maxwell. Wool was marketable because it was natural and renewable. "For some time, wool has been swamped by these synthetic, largely oil-based fibres. We lost ground, but we now need to get up off the canvas and take markets back. Mrs Maxwell called the rise in export value a "renaissance", but Statistics New Zealand painted a less romantic picture reports The Southland Times.
Statistics NZ spokesman Colin Marshall said wool once accounted for one-quarter of NZ's export earnings, but now it was less than 2 per cent. A Statistics report acknowledged wool export prices climbed to a 21-year high in 2001, but said NZ sheep numbers peaked at 70.3 million in 1982, compared with 33 million in 2010. In 1960, wool was 71 per cent of a sheep's relative export value importance. Sheep meat made up the remaining 29 per cent importance, the report said. A sheep's relative export importance had flipped by 2010. Wool was 16 per cent of a sheep's export importance, with meat 84 per cent.
Waikiwi wool buyer Bob McLean said China was NZ's market. Despite China spending up large, the wool industry had shrunk, he said. The Chinese bought large amounts of NZ wool, but worked with small margins. "They buy it as cheaply as they can, as much as they can, and sell it as cheaply as they can." He could not see wool being a major export earner again. "Not really." One marketing body, like Fonterra, was needed, he said. "But who would fund it? The sheep farmers don't have the money."
PGG Wrightson South Island wool auction manager Dave Studholme said last week's wool sales were disappointing. "The sale today was very poor for almost all types. A strong dollar and exporters struggling to sell wool to the international markets resulted in this significant drop today," he said. See last sale results HERE>>
Wool indicator prices
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