Sheep farmers are likely to receive less money from British Wool this year after the marketing board admitted a slump in demand had left one-third of the 2019 clip unsold.
Disruption to the supply chain linked to the coronavirus pandemic has seen prices plummet this year at the farmer-owned co-operative’s fortnightly online auctions, with low clearance rates in the normally busy spring sales period.
China, the biggest processor and consumer of wool, had its economy shut down and has experienced disruption at ports following its gradual easing of lockdown restrictions, hitting demand.
The announcement will be a blow to farmers who use the wool cheque to meet most of the cost of shearing.
British Wool CEO Joe Farren said “The severe, hopefully short-term, drop in demand for wool products, coupled with the huge global overhang in cross-bred wool stocks from the 2019 season, is likely to severely affect prices for the next 12-18 months.
“It will also make our longer-term objective of repositioning British Wool as a premium product more challenging. However, finding new demand for our wool in China at attractive prices will be a key driver of the early stages of recovery in British Wool prices,” he said.
Average sale prices have fallen at every auction between February and April, with clearance rates below 50%.
British Wool does not buy wool from farmers, but acts as a middleman to sell it on their behalf, returning the money to them after deducting its costs.
The farmers’ annual cheque is a combination of an upfront part-payment for next year’s produce and the balance of what they are owed from the previous year, with the annual sales year beginning in July.
It achieved a sale price of £1/kg for the 2018 clip, with farmers receiving an average of 60p/kg – the same rate as the previous year – but well down on the 2014 payment rate of 105p/kg.
National Sheep Association chief executive Phil Stocker said: “Fortunately, most British sheep farmers are used to wool cheques covering shearing and handling costs and often not a lot more, with few farmers relying on wool values for a living.
“We do have a small number of sheep farmers who continue to do well out of wool, and who have managed to climb out of relying on what is essentially a global commodity market.
“In my opinion, this is the only way to remove ourselves from global economic impacts, and achieving this on a national scale is a big challenge.”