British Wool has announced losses of £1.2m after a “difficult year.”

Poor sales, low world prices and increased costs have caused UK wool prices to fall by 3.7p/kg, its annual report revealed.

However payments to members fell by only 2.9p/kg, with the Board making up the difference using reserve funds.

David Nunn, British Wool’s group finance director, warned members could face further cuts if the wool market did not improve.

“The board cannot make up the difference indefinitely,” he said. “If things do not look up then producers will receive less for their wool.

“Any effects on price won’t happen until June next year, but hopefully by then the market will improve.”