New Zealand Wool Industry Facing Uncertainty

Auckland, New Zealand, Feb. 9, 2009--The multimillion dollar New Zealand wool industry is in crisis and there are fears if changes are not made soon it could be lost altogether.

Booming half a century ago now the wool industry is running scared as the global recession has dragged wool prices to 30 year lows.

"Right now the wool pipeline - it's a very long tunnel with very little light at the end of it," says Bill Ritchie, a sheep farmer.

Some farmers say they are fighting a battle on three fronts - low meat prices, low wool prices and paddocks timber dry after years of low rainfall. They say there is always the threat of going out of business.

"It's when the price per kilo of wool goes down below the actual cost of shearing an animal that you start to get pretty nervous," says Ritchie.

This means that shearers are also feeling the squeeze, forcing them to cut numbers.

"We're running a minimum number of staff so that we can get the job done to keep the cost down to the farmers," says Barry Pullin, a shearer.
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The downturn is being felt throughout the industry.

Wool is still selling at auctions but the recession means prices are lower and some bales are being left on wharves overseas as buyers default on their contracts.

"One of them was three contracts with one customer for delivery around the same date and it was a million US dollars so we're talking serious money and that's only one of them," says Nick Nicholson of the New Zealand Council of Wool Exporters.

In turn as the housing market slumps so too does demand for wool products such as carpet.

However the world largest wool handler Elders is one of a number of industry leaders trying to turn that around. It's cut a deal with American carpeting company CCA Global in a bid to increase profitability.

"The luxury end is looking for sustainable, environmentally friendly product and they're willing to pay more," says Stuart Chapman of Elders New Zealand.

Insiders agree the only way to turn around the country's wool industry is better marketing.

Fine merino wool continues to sell well, and that is down to the success of brands like Icebreaker.

"The finest carpets in the world, the finest garments in the world are made of wool and we need to get some of the value back here to New Zealand and into farmers," says Mike Peterson of Meat and Wool New Zealand.

Wool Partners International's Alan McConnon believes that wool needs to return to the point where it is no longer a bi-product for the farmer but a key part of their income.