Tuesday, 18 July 2017 08:55

Wool’s wretched woes

Written by  Pam Tipa
Wools of NZ chairman Mark Shadbolt. Wools of NZ chairman Mark Shadbolt.

Having 60% of the nation’s wool exports going to China and continuing to sell wool as a commodity has left us exposed, says Wools of NZ chairman Mark Shadbolt.

“The wool industry is in a very difficult position: China has reduced their imports significantly,” Shadbolt told Rural News.

“That highlights the reliance certain sectors of the industry have placed on China alone. The world is our market, so as soon as you allow 60% of all exports to go into one country, then you are exposed.

“China has over-produced, over-bought and now they have stopped buying. That is having a real impact on wool sales and obviously the price. We are seeing ridiculously low prices way below the cost of production.

“We are very concerned about the current situation and how long it will take to remedy it. But the key thing is that if we continue to sell it as a commodity under the current model then we will always get the prices we are getting and quite frankly it is unsustainable.”

Shadbolt says the industry needs investment. Wools of NZ is spending heavily on marketing and supporting its partners, right through to the consumers. And the industry must spend more on technology to add value to wool and to find new uses for it.

“We are making traction on those aspects, but we are only a small, new company. Unfortunately, most of the industry operates with a commodity trader mentality which doesn’t add value for the grower.

“These are challenging times; our growers are very frustrated. We don’t represent all the growers in NZ admittedly but we represent guys who are focused on wool and they are frustrated about the prices they are receiving.

“The good news for us is that we have renewed contracts we have had in place for six years. We still have contracts out there that are well ahead of the current market.

“But it is always challenging to renew those contracts when the market is so soft. We have renewed them and that is a good indication of the model we have and the relationships we have in the market. They keep growing every year; it just takes time and [ultimately] investment.”

 

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