Wool

Need for on-farm cost focus by wool growers and in levy spend

Terry Sim January 24, 2025

WoolProducers chair Steve Harrison, left, with Romesh Khajuria, chairman of Indian Wool & Woollens Export Promotion Council at ‘Redesdale’ near Bendigo.

AUSTRALIAN sheep producers considering dispersing their flocks have been urged to analyse their cost of production and returns relative to other enterprises.

WoolProducers Australia president Steve Harrison told Sheep Central he was concerned at the number of flock dispersals being advertised online and in the media.

And the attrition of flocks has highlighted the need for the industry to focus research and development spending to maintain and grow sheep numbers, he believes.

His concern comes after the December 2024 forecast of a dramatic drop in Australia’s wool production and shorn sheep numbers next year that is expected to put pressure on industry strategy and levy spending plans.

https://www.sheepcentral.com/dramatic-drop-in-forecast-wool-output-sparks-restructure-call/

Mr Harrison was concerned some producers might be making an emotional decision to get out of sheep without assessing their cost of production and returns, and comparing these with alternative enterprises.

“Wool may be the best enterprise for their country.

“They’ve really got to do their cost of production,” he said.

“Just to suggest that the other commodities are doing well is fine, but for their country wool production may be the best option.

“They need to do the figures for themselves for their own enterprise in their own environment.”

He agreed some of the recent decisions to disperse flocks could have been made before the recent lift in lamb and mutton prices, meaning a reassessment of gross margins at the latest price levels could be valuable. Mr Harrison said more Merino operations were now lot feeding their wether lambs to take advantage of high lamb prices.

The Gippsland wool producer said he is attending a dispersal at the weekend prompted by a lack of family members willing to continue the enterprise.

“There is quite a lot of that as well.

“People are also selling their land and their sheep, instead of holding it over until the next financial year, exposing them to tax losses.”

Mr Harrison said he was concerned that the Australian Wool Production Forecasting Committee’s latest forecast of 279.4 million kilograms of wool and 63.2 million sheep shorn in 2024/25 might be conservative. If realized, the flock estimate would the lowest figure since 1903 when the national flock was 54 million.

“This would mean more problems research and development funding going forward and for wool’s market share worldwide.”

With Australian Wool Innovation soon to start consulting with growers on levy fund spending priorities, Mr Harrison said there was a clear divide among producers as to whether the priority should be marketing or

“Some people want more money to be spent on marketing and the other half want more spent on research and development.

“It makes it difficult for anyone in our position to AWI with a recommendation.”

But Mr Harrison said perhaps a new approach in marketing was needed.

“Perhaps go back to socks and jocks, just get the wool selling …. at the moment, we’ve just got to get back to basics I think.”

What did AWI do during COVID?

Mr Harrison said AWI, to its credit, adjusted its marketing activities during the COVID-19 pandemic when lockdowns kept people at homer and depressed shopfront retail spending.

“We are on the record as supporting that, because at the time we deemed that to be the right decision.”

In the June 2020 Beyond The Bale edition, then AWI chief executive officer Stuart McCullough outlined how AWI was reviewing its marketing activities due to the COVID-19 pandemic’s impact on retail shopping.

“AWI must be smart about when, where, and indeed whether it is prudent to actually spend wool grower funds – and this is especially the case with our marketing activities at the moment.

“Given the drop- off in consumer spending across the globe, I asked our marketing teams at the start of March to review all our current marketing campaigns and collaborations, and stop any expenditure on projects that rely on face to face shopping or were no longer expected to produce a return on investment,” he said.

“There is no point spending money marketing a product if consumers cannot buy it.

“Those marketing funds are better held back and spent at a later time when it is more likely an investment will yield results,” he said.

“Once we see a market recovering, we will deploy the marketing funds that we held back as quickly as we can and try to stimulate demand.”

Mr Harrison told Sheep Central what has been done previously with wool marketing doesn’t seem to be working to increase demand now. When asked whether AWI wool marketing would keep sheep on farms over the next six months, he said:

“It comes back to price, we need at least 300 cents/kg (more), so it’s all price driven for the farmer.”

Whether any marketing campaign could lift wool prices 300 cents in the current global economic conditions “is the million dollar question,” he said.

Mr Harrison said he sides with wool growers who advocate a greater research and development focus, specifically on-farm R and D, to increase efficiency and lower the cost of production.

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Comments

  1. Don Mudford, January 24, 2025

    A wool enterprise must work towards higher weaning rates, 120 percent minimum in a 19 micron flock. They are out there, with easy care management. The lamb is a very large part of the Merino operation with higher wool price. If we are in an environment that can’t fatten lambs we need to produce a Merino lamb that can be fatttened economically by those that are looking for them. There are Merino lambs out there that have higher weight gains than other breeds. You just need to identify them by type.

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