Stable wool pricing needed
CROSS-BRED WOOLD GROWERS have had only two years of profitable returns over the past decade, based on at an estimated average production cost of $4.50/kilo of greasy wool.
John Dawson told Rural News that up until now, the outlook for wool has been good with prices doubling over last season. But he says the challenge is to keep things going forward.
"That's quite a big task, believe me. We've got a lot of competition from man-made fibres and obviously the international situation is precarious. So it's a big challenge for the industry to keep prices where they are.
"I think the price of wool went up too fast and that has caused problems for people in the supply chain being able to pass those increases on in a measured way."
Dawson says wool has lost market share in certain sectors because of the price rise. Particularly in Australasia which takes about 30% of New Zealand's coarse wool clip. Dawson says demand in this market has dropped by up 40%.
"The situation in the Eurozone is also giving us problems. The uncertainty is making life more difficult for people to make decisions. Decisions are either being delayed, prolonged or just made at the last minute. It's not helping the cause and although business is continuing, it's difficult."
He says the situation may become clearer when more wool comes on the market in December and in the New Year.
Dawson hopes there'll still be a stable environment, but until then he's not holding his breath.
