New scheme aims to boost wool returns

Lincolnshire-based agricultural merchant CWG (formerly Central Wool Growers) has today (24 April) launched a new scheme to help its 4100 sheep farmer suppliers increase the income from their wool.

Suppliers signed up to the ‘extra4wool’ scheme will receive a 7.5% discount on CWG’s range of products, up to a limit determined by the size of their wool balancing payment (see below).

In addition, 2.5% of the turnover on extra4wool accounts will be siphoned off into a ‘good causes’-type fund that will be used to promote domestic lamb and possibly fund an apprenticeship scheme to get new entrants into the wool grading industry.

It is hoped that £100,000 will be raised in the first year of the fund and although the idea is still at an early stage, CWG managing director Nick Kirby said it should benefit the whole industry, not just CWG suppliers.

“Our intention is to create a totally new fund of money to help maintain the impetus behind lamb and mutton promotion, either by allocating funds to an existing scheme, or by developing something new. We want it to develop into something bigger, not just a CWG initiative.”

CWG has put £20,000 into the fund to get it started and has already attracted interest from one of the Prince’s charities, Business in the Community. Mr Kirby said CWG would now talk to a number of organisations – including the NFU and National Sheep Association – about how to take the concept forward.

“We believe this account [extra4wool] is the first of its kind in the industry and can send a positive message to our wool producers that they have a valued and important part of the future of UK agriculture. However, we also acknowledge that wool is not the primary activity of sheep farmers and this is why we have set up the promotional fund.”

The British Wool Marketing Board’s Gethin Havard said it was essential farmers received a decent price for their wool. “We cannot afford to have a cost associated with getting rid of wool. With sheep numbers declining, wool is a finite product and is becoming less available than in the past.”

The UK’s total wool clip has fallen from about 40 million kg 20 years ago to around 31m kg this season. Around 70% is exported for carpet manufacturing. “The past six months have been pretty difficult for the industry,” Mr Havard said. “The credit crunch means there aren’t as many new houses being built, so the demand for carpets has fallen. However, at least the currency has favoured exports and we are seeing signs of renewed demand from China.”

About one-third of the total wool clip is classed as poor quality wool (e.g. from Herdwick-type sheep). Farmers with such sheep generally only receive 5-10p/kg for their wool (20p a head for a typical sheep), compared with a shearing cost of 70p to £1.30 a head.

Balancing payment band    *Discount (7.5%) applies to:   Max discount value
 Up to £200  First £4000 spent  £300
 £200-400  First £6000 spent  £450
 Above £400  First £8000 spent  £600


*Purchases must be made by 30 April 2010 to qualify