UK wool co-op warns of price slump after Covid-19

With global markets closed during the busiest trading period and recession on the way, the co-op says operating at scale is the best protection for farmers

British Wool has warned its sheep farmers face a financial hit after the Covid-19 crisis left the global market for cross-bred wool since February.

The co-op, which collects, grades, markets and sells wool for its 40,000 owner members in the UK, says the lockdown meant the industry saw its markets closed during its busiest trading period, between February and May. This has left members with around 9 million kilos of unsold stock out of a total 2019/20 clip of 27 million kilos.

With a recession just around the corner, British Wool warns this puts huge pressure on the sector.

“We have had to place a value on this unsold stock which is at a significant discount to the last prices sold, ” it said. “As a result the average price paid to producers for the 2019/20 clip will be 32p/kg. 

“Balances are being paid as normal upon receipt of this season’s wool. It is important to remember this is an average price for all wool grades in the UK, with some mountain wools achieving 15p/kg and some finer white wools more than 70p/kg. By way of historical comparison this year’s payment is in line with those paid in the late 2000s at the time of the financial crisis. 

“If we sell the 2019/20 unsold stock at a higher price than our assumed value we will make a further payment later this year in relation to the 2019/20 clip, depending on the economic outlook at the time.”

It said its members will face an extremely challenging market for the foreseeable future. 

“We are asking producers to support us through this very difficult season by bringing their wool into us so that we can preserve the volume use of British wool downstream, further develop our new British wool rich product ranges and emerge from the Covid-19 slump ready to exploit a strengthening market, ” it added. 

The co-op says it offers farmers a way to protect prices by consolidating wool into commercial volumes and marketing it effectively – bringing higher prices than those received by farmers in the Republic of Ireland and Europe.

It added: “Producers marketing their wool through British Wool, their organisation, represents the only realistic prospect of improved prices on a national scale in the medium and long term. 

“Wool producers can be assured that British Wool, as a trusted partner, will be at the forefront of leading the growth and renewal of wool values, but this will take time. We will emerge stronger from this period, so long as UK wool producers stay together and continue to back their organisation, British Wool.” 

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