NCWSBA executive director Rob Herrmann presents at the 2025 IWTO Congress in France.

AUSTRALIA’S Merino wool production will continue to decline without a change in growers’ terms of trade, delegates at the International Wool Testing Organisation’s 2025 Congress in France last week.

National Council of Wool Brokers of Australia executive director Rob Herrmann’s presentation at Lille in northern France detailed the successes and challenges in wool production.

He told delegates that current wool prices are not sustainable for many Australian growers and alternative options to farm are tempting.

“If circumstances do not change quickly, we will see continued declining wool production,” he said.

Mr Herrmann said the Merino percentage sold through the wool auctions has declined to around 78 percent, with the balance crossbred wool.

“Not only are there fewer sheep in Australia compared to 1990, but these fewer sheep are of a demographic that contains fewer Merino sheep.”

Mr Herrmann said specialist wool production is seen by many younger farmers as too difficult, while the option to produce grain and oilseeds is attractive.

“Cropping can relatively easily be “scaled up”, has a strong farm advisory model based on the latest science, and with technical advances in crop genetics, fertilizer and chemicals, can reliably be grown in many areas of Australia,” he said.

“This includes many areas previously considered ideal for Merino sheep.

“To date the “fight for acres” has been won by cropping, with the acreage under crops growing from 12 million ha in the 1970’s to 23 to 24 million ha in the current year.

“The growth in crop area has had the most impact on Merino sheep of any grazing option,” he said.

“This “fight” is ongoing, with the perceived ease of farming attractive compared to grazing Merino sheep.”

Shedding sheep

With the sheep meat market experiencing strong demand, with good prices and an outlook of continued demand from emerging economies, Mr Herrmann said some wool producers after generations of improving their Merino sheep, are now switching to shedding sheep.

“In remote areas the difficulty in attracting shearing staff as well as removing shearing costs is the driving factor, while in higher rainfall areas the move to crossbred types — and in some cases shedding sheep — is a response to not only reducing operating costs, but also to become prime lamb producers.

“The latest AWI/MLA producer sentiment survey is pointing to an increase in shedding sheep (ewes) from 4pc to 8pc and for a decline in Merinos from 70pc to 64pc.”

On mulesing

Mr Herrmann said many wool producers have exited wool production, or intend to exit, because they are either not willing to stop mulesing, or because of the added cost and inconvenience of ceasing mulesing is seen as not worth continuing as a wool producer.

“Regardless, the message from consumers regarding mulesing has resulted in less, not more, Merino wool.

“While there is a premium for accredited non-mulesed wool, it is unreliable and variable and has rarely covered the added cost incurred in producing wool from non-mulesed sheep,” he said.

“This issue is an example where customer preference has resulted in the wool producer bearing the added cost and then hoping that those same customers are prepared to reward them for it.

“Sadly, this market signal does not consistently prevail, leaving the wool grower to deal with a more complicated production system and greater cost.”

Live sheep phaseout impact

Mr Herrmann said since the phaseout of live sheep exports by seas from May 2028 was legislated,  wool receivals for WA are running more than 20pc behind last year, with large numbers of Merino sheep heading to the meat works.

“Local brokers report that the mood is dire, with many telling their brokers that “the next clip will be smaller”, or that “this is the last clip”.

“It is also impacting the next generation of farmers; the current negative feelings towards wool production and sheep more generally are leading to many sons and daughters returning to the family farm to question the reasons to keep sheep,” he said.

“Nationally the impact in banning live exports is not as acutely felt as in the west; however, the decision to ban live exports of sheep further contributes to the pessimism in the sheep industry more broadly.”

Shearing

Mr Herrmann said shearing is a particular pain point in the industry, with costs at least doubling in the past 20 years and the failure of the industry to evolve to a less strenuous system raising costs to unaffordable rates.

“In other businesses, faced with this economic model of rising costs and negative profits, scale of operation would be increased to compensate.

“As a comparison, cost increases also apply to a crop enterprise, with their response being to increase acreage, purchase bigger and better machines, and to apply science to production risk increasing production across the full range of seasons,” he said.

“Sheep producers find it difficult to increase production, with the requirement for skilled labour a limiting factor.

“Shearing has not evolved, with the system across the country little changed from the early 1900s.”

Mr Herrmann said finding skilled shearers who can withstand the stress on their bodies is increasingly difficult, so there is not much expectation that costs could revert.

Support needed for dedicated wool producers

However, despite the current situation, Mr Herrmann said there are still producers who are as committed to their craft as ever.

“There is a strong cohort of Merino wool producers who are thriving, despite the increasing costs and flat wool prices.

“These producers have developed large scale production systems, bred a modern merino that is cutting heavy fine fleeces, and are in many cases tapping into the demand for sheep meat with high fertility and the sale of quality wether lambs to slaughter supplementing incomes,” he said.

“In some cases, scale has been developed by corporate investment, but in many cases, it is traditional family businesses who have adopted corporate culture and invested by growing their flocks and farms over time.

“These producers are at the cutting edge in terms of efficiency and productivity,” he said.

“Their flocks are highly tuned, both in terms of breeding as well as management, and their commitment to producing the world’s best merino wool is solid.

“These producers are the backbone of the wool industry now and will be there through good times and bad,” Mr Herrmann said.

“For them, growing wool is not just a job, it is a passion which they have developed into a 21st century business that is the beginning of the journey for the great fibre used in the world’s apparel markets.

“It is essential that these producers are supported, without their initial commitment to growing wool there is no industry, all other segments of the wool pipeline rely on their primary efforts.,” he said.

Mr Herrmann said it is therefore vital that the remaining wool growers know that their commitment is valued.

“This means that connection is made with the downstream wool processors, much more than just social visits to the farm.

“These vital cogs in the wool industry need serious connection, both in terms of feedback on the supply of their product, and in the financial context; they need to succeed to keep every other cog in the wool industry wheel turning,” he said.

“It is important that at this time of difficult margins on the farm, the downstream sectors engage with the producer, providing feedback and encouragement, building relationships and partnerships, and providing opportunities for these committed producers to partner and benefit from the marketing efforts of wool processors.

“The wool industry is dependent on the wool producer; we are now seeing the greatest challenge in living memory to their continued commitment, should production continue to contract all sectors of the wool industry will feel the pain,” he said.