Support to pursue long-held dream of re-establishing wool processing in Australia

The $800,000 grant from the government allows growers to continue with the second phase of their investigation on whether domestic processing is economically feasible.

The first phase of the research, released in November, again highlighted the dangers of relying almost totally on one overseas destination for wool processing.

The Deloitte Access Economics report, overseen by WoolProducers Australia with $662,000 from the federal government, says there is still a chance a major scouring and top-making plant could be afforded here.

Expanding early-stage processing capacity in Australia to process 170 million kilograms a year could add up to $1.3 billion to wool industry output and $1.8 billion for Australia each year, the report said.

It identified overseas countries including Bangladesh, India, Indonesia and Vietnam as places Australia could partner to process wool.

The wool industry exports most of its raw product to China.

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China's market share of Australian wool exports rose from just 4.2 per cent in 1990 to more than 90 per cent in 2021.

Less than five per cent of wool grown in Australia is now processed here.

In the 1990s, half of the Australian wool clip was cleaned domestically, and half was exported unprocessed. Wool processors were then heavily supported by government subsidies.

WPA said with industry co-investment and the recently announced strategic partnership with AusHub the second phase of the investigation project is worth $1.1 million.

WPA general manager Adam Dawes said the initial report found domestic processing of half Australia's wool would produce 600 jobs.

Importantly, it would reduce the impact of a Foot and Mouth Disease outbreak by up to $1.1 billion a year.

"Domestic processing would also allow for pre-export value adding to Australian wool, with a potential Australian GDP increase of $1.8 billion," Mr Dawes said.

Phase two will identify pathways toward market diversification and the mitigation of trade risks associated with Emergency Animal Disease outbreak, and tariff and non-tariff trade barriers.

The project will road map the establishment of early-stage wool processing operations (scouring and/or carding and combing) in Australia along with those four priority overseas countries.

"This next phase of work will inform the what, where and how, which will deliver a clear roadmap and finalise our investigations in this area on behalf of Australian woolgrowers," Mr Dawes said.

A tender will be launched soon to engage independent consultants to continue the study.

That second report is expected to be prepared by the end of the year.