Australian wool market slumps as prices decline steadily

ABC NEWS (Australia)

Demand for wool has slumped, leaving farmers struggling over low prices amid increasing production costs. Adding to the dilemma, growers are now being asked how much they’re prepared to pay to support Australian wool innovation.

Transcript

00:00A mob on the move and the electric hum of shearing.

00:10It's spring in the northern tablelands of New South Wales.

00:13But for Dave Garrahy, who's been working in shearing sheds across New England for close

00:18to 40 years, this season isn't unfolding as hoped.

00:24Work's drawing up really fast.

00:25I've talked to a couple of contractors in the last week who are all on the same page

00:29as what I am.

00:30They've noticed their work's drawing up, things are getting quieter, and the volume of work's

00:36not there.

00:37On the other side of Walker, Katrina Bloomfield has been crunching the numbers.

00:42In 1971, we were getting about $20 to $30 a head for our wool, and at the moment we're

00:51getting $50 to $60.

00:52So it's only doubled what we were getting in 1971, whereas a steel post, I think, cost

01:00$0.30 back then, and now they're $8.

01:05A stud and wool producer, she runs close to 8,000 sheep, and some cattle too.

01:12Wool prices for farmers today are close to where they were a decade ago, and the latest

01:17forecast suggests the amount of wool produced in Australia this year will fall by 10% to

01:23285 million kilograms.

01:27Jock Lorry is chair of Australian Wool Innovation, a company built from farmer and taxpayer funds

01:35to drive the profitability of Australia's export-dependent wool industry.

01:40At the finer end and the broader end, it's pretty tough at the moment, there's no doubt

01:43about that, and I think a lot of the sort of medium-micron wools that have got plenty

01:49of cut in them are still sort of reasonable but not good, so it's tough enough.

01:59It's midweek in Eurala, and AWI has chosen the new pub in town to host a Q&A for wool

02:05growers.

02:07With 60% of AWI's budget spent on marketing, and 40% on research and development, the meeting's

02:15been advertised as a chance to learn more about how AWI is spending its money.

02:21It's great to get a good roll-up in my local community, it would have been a bugger if

02:25only about 10 people turned up.

02:27Last year, AWI reported revenue of more than $60 million, committing about $30 million

02:34to marketing.

02:36Tonight is a chance to show off one of the company's new campaigns.

02:44At a cost of around $4 million, the commercial builds on the $7 million Wear Wool, Not Fossil

02:50Fuel campaign released a few years earlier.

02:54Half of AWI's research spend comes from taxpayers, but all of its marketing budget is funded

03:01via a farmer levy.

03:03Currently, it's set at 1.5% of the sale price that a grower receives for their wool.

03:09Growers vote every three years in a wool poll to set the rate.

03:13With the vote due next month, almost 45,000 wool producers are now being asked if they

03:20want to set the rate at 0, 1, 1.5 or 2%.

03:26Back at Katrina Bloomfields, shearing has wrapped for another year.

03:30Like a shrine to the fibre, the shed's kitchen room walls are adorned with posters of former

03:36AWI campaigns, albeit a little faded.

03:41Katrina Bloomfield is unsure if growers' levies are being well spent.

03:47I'm just not sure.

03:48The demand has been created.

03:50It seems to be that they spend an awful lot of money on marketing, but I don't think they

03:55sell any more of it.

03:57It's debatable whether they've done a good job or not.

04:00For more UN videos visit www.un.org

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