British Wool Board defends producer levy

Recent wool price rises and a world-wide promotional campaign in 2010 could sprovide a boost to sheep farmers incomes, according to the British Wool Marketing Board.

At a meeting organsied by the Farmers Union of Wales to discuss prospects for producers’ returns from wool, BWMB chairman Frank Langrish said market indicators were encouraging. “In the last five weeks [unprocessed] wool prices have risen from 60p/kg to 90p/kg driven by currency and demand. Having sold most of the 2009 clip forward, that won’t benefit producers’ cheques this year, but the indicators going forward are good.”

But he warned that “cherry-picking” of larger UK wool suppliers by BWMB competitors threatened to undermine prospects for all producers.

Producers used to receive around 125p/kg until price guarantees were withdrawn by government in 2002 and values fell to nearer 60p/kg. After operating costs, the BWMB returns an average of about 30p/kg to producers – insufficient to cover clipping costs for many sheep owners.

BWMB competitors criticise the organisation for “wasting” producers’ money by providing free storage and subsidised finance for wool buyers, contributing to BWMB running costs. Last year BWMB costs saw producers’ cheques levied 32.3p/kg.

Cost remains a vexed issue for BWMB. The domestic annual clip has fallen from 44m tonnes in 2002 to 29.5m tonnes in 2009 – reducing the tonnage over which costs could be spread.

Competitors with lower overheads were cherry-picking producers, undermining the BWMB’s market further, Mr Langrish said. Without the top 1% of producers, that produce 10% of British Wool, the BWMB could be in jeopardy within a couple of years, he added.

But Aidan Walsh, chairman of Texacloth, Kildare, told the meeting that open competition for wool generated a healthy marketplace and BWMB was no longer serving the interests of producers. “Your priorities are wrong,” he told Mr Langrish.

“You help pay for carpet manufacturers to attend glossy international trade shows at the producer’s expense. I wouldn’t. It’s not my job to promote their business – let them do it and pay for it,” he said.

“And I disagree with you on the forecast for future demand,” added Mr Walsh. “We both know the Chinese have influence in more markets than our own. When they go out to buy they do so almost regardless of price but once they’ve enough – that’s it. That’s what’s driven the market.”