WESTERN Australian-based wool brokers are in a battle for the business of Elders grower clients after the agribusiness giant announced it would no longer sell clips in the state after July 2027.
Sheep Central has spoken to most of Elders’ wool broking competitors, with some claiming growers have called them to transfer their business to ensure clips are sold in the state rather than in Melbourne as proposed by Elders.
WAFarmers livestock president Geoff Pearson said WA wool growers are considering their options because there will be costs in trucking wool to Melbourne.
“As much as Elders say that it is not going to have any effect on the price, it is, because you’ve got a freight component to get it across the paddock (Nullabor).”
He said growers are concerned sending wool east would limit competition in WA auctions.
“But at the end of the day, the trend is that just more and more people are getting out of sheep.”
Elders has disputed the claims of clients taking their wool business elsewhere, and claimed most of the feedback to the decision has been positive. The company has also downplayed the potential for the loss of wool client associated real estate, livestock and merchandise business by refusing to acknowledge if this was considered.
One WA broker said he has fielded several calls from WA growers offering their business and potentially the operation’s livestock business.
“Talking to the clients – they’re not happy.
“To me, it’s about ‘support local’, which is a comment I’ve had from quite a lot of clients as well; that they will support local,” he said.
“Ultimately, I don’t care where their wool goes, I would love it to come to us, but as long as it stays local I don’t care.
“To be honest, I think they (Elders) are going to be lucky to keep 20 percent of their wool business,” he said.
“There are a lot of upset shareholders and clients.”
One broker said there has not been much need to convince Elders clients to continue to sell their wool in WA, “because it’s a ridiculous decision that is going to cost guys between $50-$60 a bale to get them to the east.”
The broker said the argument that more sales are held in Melbourne would be undermined by the 2-3 weeks it would take to consolidate wool into large loads and ready it for marketing in Melbourne. Also all potential buyers have electronic access to the sale catalogues in all the major auction selling centres in Yennora, New South Wales; Melbourne, Victoria, and; Fremantlke, WEstern Australia.
“We can turn wool around in 72 hours here and have it ready for sale.
“They (Elders) are not going to core/sample in WA, it’s going to be double-handled, from the farm off a truck, onto another truck, and over the Nullabor – have a look at the carbon footprint for that,” he said.
“All that they’ve done is made a decision based on filling their automated centre in Victoria (Ravenhall) and that isn’t anything to do with giving growers access to better markets.”
He said WA had no superfine or crossbred wool volume and in the “bread and butter wools 18.5 micron and coarser” WA’s prices stacked up compared to those in the Yennora and Melbourne auction centres.
“So they’ve got no argument there, all they’ve got is an extra cost per bale which is going to be in the vicinity of $40-$50 a bale … this will just come off the grower’s price.”
The broker believed the Elders decision would only strengthen the other WA brokers’ position.
“They (Elders) are very small brokers, they are now probably going to handle maybe 35,000-36,000 bales this year (in WA), which puts them as the second smallest broker, whereas they used to be the biggest.
“I would hazard a guess that they will lose half or more of the wool they have handled,” he said.
“We picked up four wool clips in the first week without even doing any work.
“A lot of our big clients that deal with us with wool and they might do some livestock and wool with Elders, they’re livid, they’re looking at taking all their business from Elders,” he said.
“I think they will get more blowback because they haven’t realised the ramifications of what they’ve done.”
Another broker told Sheep Central all the WA brokers were promoting the message ‘keep it local’, to keep wool in WA for sale.
“I think we are all on the same page – keep it local.
“There are still five brokers left and two private buying companies.”
One broker said the slight difference in the number of buyers operating in Melbourne versus WA is explained by the fact that the west did not attract crossbred wool buyers because it had produced limited quantities of that wool type.
“We’ve got all the major buyers.”
He said the buyers he has spoken to said they would not be absorbing a $40-$50 a bale freight bill on WA-sourced bales sold in the east.
“On top of that, you’ve got to get the bales to a WA depot, so say if you sent them all up to Newdegate, that’s another $15-$17.”
He said the promise of higher prices in the eastern auctions was a “hard thing to sell” with the Western Market Indicator this week at 2052c/kg clean, compared to 1884 cents at Yennora and 1785 cents in Melbourne.
In auction sales this week, the micron price guides for 19.5, 20 and 21 micron fleece wool in the west were higher than in the east and north, and also higher than Melbourne in the 18 and 19 micron MPGs.
More buyers and sales were key drivers – Elders
Elders general manager – operations – Dave Adamson said most of the feedback on the decision to sell WA client’s wool in Melbourne after July next year has been positive.
“The transition period runs to July 2027, so we feel it gives plenty of time for growers to be further engaged and have comfort in the decision.
“We have a group of WA growers visiting Ravenhall soon … something we will look to continue throughout the transition period.”
“We have also had interest from non-Elders clients, particularly around the increased buying competition in Melbourne.”
Mr Adamson would not estimate how much WA wool Elders hoped to retain or if the decision would be worth it if only a small amount of wool was consigned to the Ravenhall facility.
“The key driver of the decision was ensuring Elders clients had access to a market with a higher number of buyers and more weekly sales than are currently run in Fremantle.”
Mr Adamson said Elders will cover the bulk of the WA wool freight cost to Melbourne and the post-sale charge will be in line with Brisbane wools sold through Ravenhall.
“We estimate that around 20pc of WA production is already freighted east for exporting, processing or to be sold in either Melbourne or Sydney, so it isn’t necessarily new for all growers.
“The fact is that many of our growers will actually see their freight costs reduce once we have set up our regional depots.
“We have proven wool can be in the next available sale if received into Ravenhall by Friday morning,” he said.
“That is the benefit of operating an automated facility 24 hours a day.”
When asked if Elders had considered the concurrent loss of livestock, merchandise and real estate business, Mr Adamson said, the decision was made “in the best interests of our wool grower clients for the long-term and driven by external factors affecting our industry.”
“As we’ve said previously, the exit from the sheep live export industry has significantly impacted the state’s flock, there is no denying this.
“Our priority is to support the interests of our growers and we see this decision as reflective of that.”
Mr Adamson said Elders $25 million investment in the Ravenhall facility is a clear example of backing the industry for the future.
“It is one of the most significant investment in wool handling this century and reflects our long-term focus on supporting the Australian wool industry.”
When Sheep Central asked for full details on the Elders offer to WA clients it was directed to the Elders Wool website.
Are contracts an option for WA wool growers?
In a media release earlier this week, Mr Pearson lamented the lack of forward price contracting for wool in WA, as is available for sheep meat, especially lamb.
Price certainty in times where input price increases are being felt at the farmgate is a significant driver of producer confidence, he said.
“The introduction of more forward price contracting options for WA wool growers would provide the confidence for them to stay in the game.
“However, to date we have not seen any suggestions of this nature, to rebuild confidence in the wool industry outlined in the Federal Government’s Live Sheep Export Phase Out Transition package,” Mr Pearson said.
“In the wake of the Elders decision, WAFarmers encourages wool growers to research and explore the many marketing options including direct selling that is available to them for marketing and selling their wool.
“We fear that the Elders decision to effectively bail on the WA wool industry is just the first of many in the WA wool supply chain, and again we ask, what is the Federal Government doing to prevent the collapse of the WA wool industry in the wake of their very poor, ideologically driven decision to phase out live sheep exports by sea?”
Zentera Wool Company Australia supply manager Toby Brown said WA clients would be eligible for potentially three and/or rolling 10-year contracts if they could meet ZQ program requirements.
“We’re getting traction with those contracts now for icebreaker in New South Wales, Victoria, WA and Tasmania.”
He couldn’t say that the Elders decision has had any impact on WA interest in contracts.
“We are really focussed on the ZQ certification giving confidence to brands, so we can deliver premiums to growers through those contracts.
“We see that that’s the way to invest in wool; if growers re getting premiums they are going to want to be in wool and grow their investment.”
This is typical of the brokers. They will all fight over diminishing bales instead of adopting bold concepts to increase efficiencies and cut costs.
We are not Elders clients, but well done Elders for investing in the industry. This is not about the live sheep trade; it is all about an industry going broke because of poor leadership and escalating costs.