AUSTRALIA’S wool production has been forecast to next year fall to a level not seen for four years, but not everyone agrees on the solution to the declining output or even if it is a problem worthy of an industry strategy.

Some industry stakeholders have even suggested the answer to more profitable and increased wool production lies with the other component of a sheep operation – the carcase and its eating quality.

The Australian Wool Production Forecasting Committee last week estimated the nation’s wool production would be 318 Mkg greasy in 2023/24, dropping to 285 Mkg greasy in the following year.

Poor seasonal conditions in western Victoria, Tasmania, South Australia and Western Australia prompted the lower 2024/25 season forecast. But the committee also quoted the May 2024 Sheep Producer Intentions Survey that indicated a reduction in producer sentiment in the wool and sheep meat sectors due to  conditions, feed availability, input costs, availability of labour, and sheep and wool prices.

Australian Council of Wool Exporters and Processors president Josh Lamb said there is a potential for declining wool production to become a problem “because all products have a critical mass.”

“We are nowhere near that at this stage though in general volume terms.

Mr Lamb said better prices and returns to growers would go a long way to arresting the slide, but it won’t correct the trend on its own.

“Not all producers are making this decision purely on price.

“There a variety of factors as we all know, generational change, land values, farm management, shearing issues etc,” he said.

“The industry is well aware of the problem.

“If growers don’t prosper than we are all at risk,” he said.

“Another industry committee won’t be able solve some of the reasons to stop growing wool.

“I do think 65-75m flock average is most likely where we will sit longer term,” Mr Lamb said.

“Sentiment is quite low currently because we are at the bottom of a particularly bad (global economic) cycle.

“It is a cycle that will turn better, we just have to try and make sure we limit the longer term damage to numbers.”

WoolProducers Australia chief executive officer Jo Hall said the decline in wool production is concerning.

“If this trend continues long-term then it may become a future problem as Australia produces the bulk of the world’s apparel wool; however, the main problem we currently have is that there is very little demand for wool hence the low prices.

“It’s as simple as growers receiving more money,” she said.

“As producers we are in competition for hectares with other enterprises at the moment and while there are other factors involved with people choosing to reduce sheep numbers or leave the industry completely such as higher overheads and input costs, this would be mitigated if the EMI was significantly higher.”

National Council of Wool Brokers of Australia vice-president Alistair Calvert said the industry was under a “storm” of poor seasonal conditions, wool prices and the impact of the live export sheep by sea phaseout decision.

But he said “there’s nothing like recover in seasons and/or prices” to see wool production turn around.

Mr Calvert said the industry needed to maintain a critical mass of wool production to meet future demand and he saw wool was in a good place as a fibre with consumers.

He said education of growers is critical.

“I believe there are huge variations between those (producers) who are profitable and those that aren’t, that are still growing wool.

“I believe that as an industry we need to do more to help those people increase their profitability.”

He said the stories of the winners of the LambEx feedlot trial, that was dominated by Merinos with quality carcase and eating quality traits, needed to be extended throughout the industry.

“I do think we need to provide this positive information out to the mainstream producers so that they can make informed decisions and see that their peers are still doing well.”

AgriVet Business Consulting principal Dr Graham Lean said recent analysis of gross margins through the decision support tool GrassGro showed that Merino flocks of various kinds stood up well against beef, prime lamb and cropping returns.

“I wouldn’t say there is a clear winner out of any of them – the bottomline is that the specialist fine wool Merino flock running a few wethers — 17 micron, average 5kg annual wool cut — is actually the most profitable, but the other flocks weren’t away.

“What people don’t realise, I guess, is how much income over the last 5-10 years has come from meat,” he said.

“Around about 30-40 percent of their income is coming from mutton sales and that’s putting a real cream on their income levels, because mutton has been really strong over that time.”

And Dr Lean said there are good reasons for producers to be optimistic about the future demand for lamb and mutton.

“All of them have been experiencing strong demand increases based on the total value of production from Australia, basically volume times price.

“But the other thing about Merinos now is that some of the modern types of Merinos you can actually hook Merino lambs, albeit based on discounted pricing, nut that actually stands up well,” he said.

“Some of the more dual purpose Merinos are certainly fully capable of producing prime lambs.”

Dr Lean said some of the results from the LambEx trial and the Peter Westblade wether trial show there are purebred Merino bloodline lambs that are very close to crossbred lambs.

He said there are a range of sheep enterprises that are profitable and there can be a lot of flexibility in the type of Merino available to producers for wool and meat production.

Dr Lean said he expects wool production to recover with a return to normal global economic conditions. But he recommended sheep producers compare their operation and any alternatives being considered with a GrassGro tool simulations with weather, soil, pastures condition data and stocking rate data from their location.

Mecardo analyst Robert Herrmann said the fact that there are Merino breeders having success with selection for carcase and eating quality traits is positive.

“The next step is that those quality meat traits that are being produced of breeders of those genetics need to get rewarded for it.

“There is now no argument against them being as good a crossbred lambs on the grid if they measure up,” he said.

“This is where the Merino industry has to go and if this all comes into line then the profitability of Merinos at farm level will be positively impacted.”

Mr Herrmann said building a meat aspect into Merinos will also need a focus on lamb survival and ewe productivity.

South Australian Merino and terminal seedstock producer Andrew Michael said the forecast downturn in wool production represented an opportunity for “realignment” in the sheep industry.

Mr Michael said data from LambEx feedlot trial and the Swan Hill paddock trial of several maternal and terminal breeds indicated there is no doubt that a fully traceable genomic related breeding program within Merinos would help maintain the flock and wool production “on an animal that is sustainable.”

This would mean a focus on Merinos with eating quality traits and a wool production that did not have a negative effect on animal welfare, as in non-mulesed and less prone to flystrike, he said.

“It’s a great opportunity for the industry, but there is no point in having sustainability in the industry, if we don’t have traceability through the supply chain.”

He said sheep producers nationally next year having all lambs electronically tagged would provide an opportunity for them to receive feedback from processors and get paid for the quality they produce.

Australian Wool Innovation CEO John Roberts said did see a problem for Australia supplying future demand if wool production kept falling.

“Yes and this is largely in the hands of brands and processors to pay more for wool to keep production in Australia viable.

“In recent meetings with brands and processors in Europe and Asia I have repeatedly made the point that production of high-quality Australian wool is not guaranteed, it requires a sustained increase in prices paid to growers soon,” he said.

“That said over the medium to long-term it’s proven that wool is a solid performer in many enterprises.”

Mr Roberts said an increase in price is the best way to encourage wool production.

“On the other side, lower costs to growers would also help their bottom line.

“AWI has projects targeting both these areas,” he said.

“Our investments in shearer training and bioharvesting are examples of projects that help address cost issues.

“Our marketing efforts have two purposes driving sales and defending the fibre especially in Europe when it comes to eco-credentials in particular,” Mr Roberts said.

Mr Roberts said AWI has strategies to grow the value and demand for Australian wool and to deliver better on farm programs and systems to reduce costs for growers.

“We do not have a standalone strategy to address falling wool production, instead our focus is on delivering outcomes to make wool production an attractive enterprise.”