Major Wool Crisis In Australia

Are Australia's days as the #1 world wide wool producer numbered?

The Australian wool industry is currently undergoing a major decline. Find out why. Read on...

By Kristie Kou - 23rd October 2002 - Back to News

Recently, China is emerging as a threat to the long-term stability of the Australian wool industry with its sheep numbers now the largest in the world.

Over the last two hundred years, Australia has nurtured its reputation as the largest producer and exporter of wool in the world.

Source: (http://www.woolgroup.co.nz/our_wool/global_view.html#world_wool_prod)

However, today, there are 130 million sheep in China, compared to 115 million in this country. While most of the sheep there are bred for meat, and wool quality is still generally low, the Australian industry is aware that China is working hard to produce high-quality wools in huge volume.

In the Xinjiang province alone, the merino flock has reached 10 million – many of them derived from breeding stock sent under Australian aid programs.

The wool industry is extremely important in China due the following reasons:

Its economic and political significance to the country
Major source of cash income in pastoral regions
Sheep meat is an important source of food supply for certain ethnic minorities
China is both a major wool consumer and a processor of domestic and imported wool for the Chinese market and export

In recent years, China has been Australia’s main customer for wool exports. Last year, 39 per cent of Australia’s wool by value was bought by China and was worth $1.45 billion in exports.

Presently, the Australian wool industry is currently undergoing a major decline, with processors closing down plants and cutting jobs. Wool production is expected to fall below 500 million kilograms next season, the lowest level in the past 50 years.

The wool-processing sector is already at 30 per cent over-capacity on a global level, and conditions will worsen due to the drought affecting many sheep-producing regions. Italy, South Africa and New Zealand will close down their processing plants, with more nations and producers to follow such as Michell Australia, which has had to sack 20 staff and shut down its country buying section.

Andrew Thomas, managing director of Michell Australia, said it is no longer feasible financially to continue the company's buying infrastructure due to the continuing fall in sheep numbers. Mr. Thomas said it is the worst recession in the wool industry he can remember. He predicted serious problems in the future if it's not possible to increase the amount of wool in the textile market.

At present, the Australian wool industry is suffering through wool producers switching to grains and beef in search of higher incomes as it offers better alternatives.

Source: http://gippsland.com/

Published by: news@gippsland.com

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