Challenges for wool board despite higher prices

Rationalisation of depots, streamlining haulage and investment in cost-cutting machinery will continue at the British Wool Marketing Board.

The board’s accounts to April 2010 showed a deficit of £105,000 compared with a £669,000 surplus the previous year. This reduced reserves to £1.459m compared with £1.565m.

Wool prices have risen dramatically in the past two years but a smaller sheep flock, the state of the global economy and hefty pension liabilities are some of the challenges faced by the board. Chairman Frank Langrish repeated earlier calls for all wool to be sent to the board so that handling and processing costs could be kept down.

Higher prices saw a total clearance of wool from the 2009 clip, which was 8% down on the previous year. Producers were paid 47.7p/kg compared with 33.2p/kg in 2008.

Expectations for the current year, when the 2010 clip is marketed, are a further increase to 72p/kg, based on an advance of 14p already paid plus a balance of 58p/kg if auction prices to April 2011 hold the levels seen in February, March, April 2010.

A further fall in the clip is expected this year before stabilising next year.

The board will continue to focus on reducing transport costs by introducing more compacting machines and farm presses as well as restructuring haulage arrangements.

A new depot has been bought in Bradford and was operational from the beginning of the current season. The board has been granted planning permission to increase warehouse space and to provide sufficient office space to move the head office to this site once the current site is sold.

A summary report warns that the board will have to pay substantially higher pension contributions to eliminate a pension funding deficit. In the year to April 2010, it paid an additional deficit pension contribution of £1.2m into its pension fund.