Superfine in decline

05 Sep, 2014 04:00 AM
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10
 
Consumers are sending no price signals to say they want superfine wool

HISTORY might record 2014 as the year superfine wool production died as a mainstream enterprise in Australia.

Super- and ultrafine woolgrowers have hung onto their flocks for years, in the face of declining profitability, not believing that the world could ignore 'the world’s best fibre'.

Now, with the price difference between fine and medium wools finally evaporating and profitability intractably in the red, superfine producers are moving onto other enterprises en-masse. Few think there will be any opportunity to return.

Take Andrew Ledger, fifth-generation woolgrower at Yass, who is currently listed as president of the Yass-Goulburn branch of the Australian Superfine Wool Growers Association.

In May, Mr Ledger sold the 6000-head 15-17 micron flock he had carefully nurtured over the years. His property “The Mullion” now carries cattle.

He recently watched the last few bales of his wool being sold. It made 855 cents a kilogram, confirming the wisdom of his decision - and his profoundly regretful belief that “it’s just the way the world is travelling”.

According to Mr Ledger, “The Mullions” is on a road that once carried super- or ultrafine wool enterprises from end to end.

Now there are none: some producers have moved up the micron ladder in order to cut more wool from bigger sheep, but others have moved to meat sheep or cattle.

The maths on superfine

John Powell has also just abandoned 25 years of superfine wool production. His Yass property “Woodvale” is only 200 hectares, and he rates himself as a hobby producer, but one who still wants a capital return on his stock.

In the past, he could sell a bale of 15.7-micron hogget wool for $6000. Now he can’t get 1000c/kg greasy.

The maths on superfine has not added up for a while, so just before the onset of winter Mr Powell sold all but a handful of his Merinos.

In spring, he is restocking with a Wiltipoll ewe flock that will be used to breed toward an Australian White meat sheep enterprise.

The trends are self-evident, Mr Powell observed.

Globally, consumers are sending no price signals to say they want superfine wool, and clear signals that they want more sheepmeat.

For wool, the signals are all about deflation. When Mr Powell’s daughter managed an outdoor equipment shop in Sydney a few years ago, Icebreaker Merino wear sold well despite being priced in the hundreds of dollars.

Recently, Mr Powell’s wife bought next-to-skin superfine garments in Costco for about $30. Woollen baby jumpsuits are selling for $60.

“I don’t see consumers going back to paying hundreds of dollars for woollen garments if they get used to these sort of prices,” Mr Powell said.

Deep pessimism

Down the road at Wee Jasper, Ian and Helen Cathles are also winding back a long, heartfelt engagement with superfine wool production.

Mrs Cathles is a past president of the Australian Superfine Woolgrowers Association. The Merino flock on “Cooradigbee” used to number 12,000; it’s now down to 3000, and most of the land is leased out.

Age is a factor, Mrs Cathles said, but so is profitability, along with a deep pessimism about Australia’s ability to sell the attributes of deep-crimping superfine wool in a way that will bring the fibre into vogue.

Is the apparent demise of superfine wool a preventable failure?

Andrew Ledger doesn’t think so: he believes the consumer world has developed other priorities and superfine has been left in the dust. It happens in business: once-strong hardware companies like Nokia and Blackberry were left behind by the global shift to smartphones.

John Powell thinks the problem is that woolgrowers don’t know whether there might have been an alternative to the current crash.

Mr Powell, an ecologist by training, managed extension programs for the Dryland Salinity and Future Farming Industries co-operative research centres.

An essential part of these programs was measuring the return on investment (ROI) of money invested in marketing. In Mr Powell’s view, Australian Wool Innovation (AWI) has failed to show whether the ROI on its marketing programs has helped superfine producers.

Mr Powell thinks the evidence suggests not.

“AWI’s marketing strategy has benefited superfine growers in other countries, and the fine to medium growers in Australia, but not Australian superfine producers,” he said.

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FarmOnline
Matthew Cawood

Matthew Cawood

is the national science and environment writer for Fairfax Agricultural Media
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READER COMMENTS

Freshy
5/09/2014 11:03:50 AM

Very sad times for wool producers - yet we still hear AWI telling us we need a merino base to the Australian flock.....I think the world has moved on and its time to be looking at highly fertile meat sheep that produce under a range of conditions to supply to the growing meat market. Perhaps its time to think of Dorpers as our base flock in Australia.......we need financially resilient farmers and this requires cashflow and profits under a range of conditions. Its time for some rethinking of the Australian sheep industry
seethelight
5/09/2014 5:25:27 PM

Very sad indeed,but no accident.The decline of the wool industry has been an avoidable man made catastrophe,which can be attributed to the failure of the Reserve Price Scheme.The RSP was the most costly failure of any commodity programme in history.It destroyed businesses indiscriminately from the farm to the retailer world wide. Statutory Intervention, designed to defy the market ,comes with its consequenses, in this case destroying the demand for wool to the extent that there are less sheep in Australia today than there were 100 years ago.But growers are still levied to fund more madness.
Glen
5/09/2014 6:39:59 PM

A few years ago a well known Wagga consultant company principal made the comment "anything over 20 micron is rope". Well the most profitable flock I know of in the last 10 years produce 21-23 micron wool cutting 8 plus kilograms. They have left out style,handle, not worried about a bit of colour and just filled bales. Lambing percentage of around 120%. We have become to precious listening to so called "experts" and todays superfine prices are the result.
Barcoo
5/09/2014 6:52:04 PM

Back in the 1980's I would get all my rams fleece tested and cull any that had fibres over 30 micron. This was to reduce the "prickle factor" of the wool. Even 18 micron rams could have some fibres over 30 micron. Clearly the whole industry was doing the same thing because I learned at a recent Wool Forum in Cooma that the processors are using wool up to 20 micron for "next to skin" clothing. That would have been impossible 50 years ago.
Ted O'Brien.
5/09/2014 7:00:36 PM

All because the Howard government had not a clue about some of the most fundamental matters in doing business. Citing the "Law of Supply and Demand" they deliberately forced growers to slash production in the belief that this would raise the price. They slashed production so far that they bankrupted the entire world trade in wool. The rock that wool perished on was the WoolStock company. Ever since that time it has been impossible for traders to make secure plans to trade on anything more than a hand to mouth basis. Wool has been too hot a commodity to touch.
Ted O'Brien.
5/09/2014 7:06:08 PM

Nothing happened in the textile trade to exclude wool. The unique physical characteristics which made wool so readily marketable in the 1980s are still the same unique physical characteristics, even more marketable than they were then. There is no good reason why wool should not today be bringing in more than $15 billion a year. The Howard government busted it down to $2 billion. The resultant losses are in the hundreds of billions of dollars. That is the principal cause of nearly all the financial problems that rural Australia has faced in recent times.
Mad Matt
5/09/2014 9:27:21 PM

What's new all farmers are facing the problem, consumers what the best but don't want to pay for it.
Porpa Dorpa
6/09/2014 12:12:11 AM

Dorpers as our base, get real fresh, When you can get a May June drop merino to be 50kg as of last week and cut a small clip of them in the coming weeks tell me why we need more hairy dorpers, which the abbs only kill when there is nothing else!! the merino is not the sheep it used to be it has evolved with time, the only breed adaptable enough to do so..
Percy
6/09/2014 2:42:48 PM

Sounds like sheep are again classed as ground lice and sheep farmers need to be dispensed with as quickly as possible! Many years later it has taken the Chinese monopoly on wool buying to finally achieve the inevitable. Consumers better enjoy their last wooly jumper or soft underwear of fine quality because that is likely to be your last. Because buyers will not pay a realistic price for quality then overseas grown prickly wool will again become the norm. The next generation do not want the work involved either.
Ken Chan
6/09/2014 4:38:12 PM

Australia has one of the finest, if not the finest merino fibre in the world and like 'horses for courses' it's the correct marketing and targeting that will put this ultrafine merino on top of the world's 'high demand ' markets. I am new to this market and my outreach has not been successful. I have a new project initiative and I have difficult sourcing superfine fabric for the special markets that I am targeting, a market of at least 200 million consumers. I do not know if this perhaps is a good number. But if our farmers or AWI believe that this is, please let me know by email. Ke

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