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Thursday, June 18, 2015

What's the story with non-mulesed wool?

By Andrew Woods, ICS  |  Source: AWEX, ICS, AWI

Key points

  • The proportion of wool declared as non-mulesed or ceased mulesed has been stable during the past four years.
  • The proportion of wool declared with pain relief has nearly doubled during the past four years.
  • Price premiums for non-mulesed and ceased mulesed wool are there, but are small.
  • Western Australia continues to stick by the economic rationalist line that until the market rewards the abolition of mulesing, they will continue to use it in their farming systems.

2015-06-18 Mulesed Wool FIG 1

2015-06-18 Mulesed Wool FIG 2


Mecardo last looked at the volumes of non-mulesed wool, according to the National Wool Declaration (NWD) which was introduced to Australian auctions seven years ago, in March 2014. This article updates the volume data and takes a quick look at a price effect for some fleece types.

There are three levels of non-mulesed status provided for in the NWD. These are: not mulesed (wool from sheep not mulesed), ceased mulesing (wool from a property where no lamb has been mulesed during the past 12 months and are not intended to be mulesed) and pain relief (wool from sheep that were treated with a recognised pain relief product at mulesing). Figure 1 shows the monthly proportion of wool sold at auction according to the three status levels recorded in the NWD.

Since 2011, the proportion of wool declared as non-mulesed and ceased mulesed has increased slightly at best, while the proportion declared as pain relief has nearly doubled to around 20%. The proportion of wool declared as non-mulesed has stabilised around 7-8% of wool sold, while the proportion declared as ceased mulesed has been around 2-3%.

Figure 2 gives a breakup of non-mulesed status by region for the current season to May 2015. Western Australia continues to lag the eastern states in terms of the proportion of wool falling into one of the three declaration states. In the eastern regions, between 25% and 40% of wool has been declared while in Western Australian regions, less than 11% has been declared this season.

Elizabeth Nolan, in the updated Economic Value of Wool Attributes Phase 2 (prepared for AWI and released in November 2014), found a premium in the order of 1% to 1.5% for non-mulesed and ceased mulesed wool for the two-year period to 2013, along with a smaller 0.4% premium for wool declared as pain relief.

You have to look hard to find such small price effects. Table 1 shows some analysis by Independent Commodity Services P/L for quite specific 19 and 20 micron fleece types. These match the Nolan findings for 19 micron but not for 21 micron. It is easy for the day-to-day vagaries of price movements in the wool market to mask such a small effect. This continues to explain why the proportion of wool declared as ceased and non-mulesed is not growing. Presumably, pain relief is less disruptive to apply to farming operations hence its growth in use, even though there is effectively no reward for the effort.

What does this mean?

The market is rewarding farmers for stopping mulesing in a minor way, with some small premiums for some categories. These small premiums are easily swamped in the hurdy-gurdy of an everyday wool market where a range of factors go into determining price. As a consequence, the proportion of wool declared as non-mulesed and ceased mulesed have been stable in recent years (at low levels). However, the proportion of wool declared with pain relief has grown, doubling during the past four years. Farmers are aware of the issue, but in the long run are economic rationalists.

Mecardo information is provided to assist in your marketing decisions. It contains a range of data and views on the current market. It is not intended to constitute advice for a specific purpose. Before taking any action in relation to information contained within this report, you should seek advice from a qualified professional. The information is obtained from a variety of sources and neither Mecardo nor Ag Concepts Advisory will be held liable for any loss or damage whatsoever that may arise from the use of information or for any error or mis-statement contained in this report. 


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