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Wool exports decline, local processing increases

17 December 2003


Wool exports decline but local processing increases

Wool production is expected to continue to decline over the next three to four years, according to the latest MAF Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) report.

The 2003 SONZAF report says that wool exports are expected to increase in the current season, but from there are forecast to decline to 2006/07, reflecting both the expected fall in production and the growth of further processing in New Zealand.

However, it says the longer term outlook for wool exports is generally encouraging.

New Zealand's total wool sales for the 2002/03 season, at 173,000 tonnes (clean) were similar to the previous season's levels but exports fell by 9 percent to 137 000 tonnes (clean) for the year ended June 2003.

This fall was offset in part by a 16 percent rise in domestic processing of New Zealand wool.

Total sheep numbers fell by one percent from their estimated level of 40 million the previous year but production per head rose from 5.71 kilograms during the 2001/02 season to 5.81 kilograms in the 2002/03 season. This reflected favourable weather for most of the season.

Looking to the 2003/04 season, lower sheep numbers and a likely fall in per-head production following the poor weather over much of the country during late winter and early spring is predicted to lower production by three percent.

The forecast decline in sheep numbers through to 2006/07 will result in lower total wool production and exports.

Prices for all wool grades at auction are forecast to decrease in the 2003/04 season owing to the higher value of the New Zealand dollar which will reduce demand from China and Europe - New Zealand's two major export markets.

Most of New Zealand's wool production is in crossbred wool, which is particularly suited to the carpet industry.

The report says there has been rapid growth in the further processing of strong wools in New Zealand, primarily into carpet yarns.

Industry reform has dominated the wool industry in the past year. A major feature has been the enactment of the Wool Industry Restructuring Act 2003, which came into force in July.

The SONZAF report says the longer term outlook for strong wool producers is encouraging. Wool is expected to maintain its market share for carpets as well as niche markets in the fashion industry.

Trade liberalisation is expected to lower the cost barriers to trade in textiles and garments. The resulting lower prices will increase demand for wool-based products compared to synthetic-based products.

In the longer term, new knowledge of sheep genetics and biochemistry will help the industry exploit new productivity-enhancing techniques and increase prices and profitability.

Ends


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