By Roberto Cardellino, DELTA consultants | Source: DNA, CMPP
Uruguay is one of the group of countries of the southern hemisphere that have the greatest importance in wool and sheepmeat markets worldwide. The situation and strategy of its sheep production system is a useful reference for growers, including in Australia.
The sheep population in Uruguay has fallen by 70% since 1990 (from 25 to 7.5 million), mainly because of the substitution by beef cattle, cropping and forestry. Similarly, Australia has seen a 60% fall in the flock size over the same period.
In terms of wool production, at 30mkg (greasy), Uruguay represents only 2% of the total. However, the proportion is higher in terms of countries producing high quality apparel wools. Sheep breeds include the Corriedale (60%), which produces medium micron wools (27-30 microns), as well as the Australian merino, the Dohne Merino and Polwarth, which produce finer wools (18-24 microns). Figure 1 shows the distribution of the wool exported by fibre diameter.
Interesting to note is the high proportion of early processed wools, something quite different to Australia. At present, of a total of 33 mkg of wool (clean basis) is being exported from Uruguay, comprised of 58% wool tops, 21% scoured and 21% greasy wools. Therefore, the basket of wools exported is more diverse than other producing countries, which could be considered an advantage.
Figure 2 shows the evolution of exports during the last years. The amount of wool tops exported has decreased from 38 mkg in 2001 to 18 mkg at present. This decrease is a result of competition by China and the reduction of the Uruguayan clip. In 2001, Uruguay had six top making plants. Currently, there are four plants competing with China. It is Uruguay’s top making efficiency and not low cost labour that allows it to compete successfully.
In order to adequately meet these exports, the needs of top makers and the overall strategy, Uruguay imports between 18 and 20 mkg greasy wool annually, mainly from other countries in the region (Brasil, Perú, Argentina), but also from countries outside the region.
Figure 3 shows the main destinations for Uruguay’s wool exports. China dominates the greasy and scoured markets, while the EU takes many of the high quality fine and medium micron wool tops.
There is no one hard fast rule for wool producing/exporting countries in terms of their strategies. Whether or not early processing of wool is feasible depends on many country-specific factors. Uruguay competes successfully with China in top-making, which offers opportunities to export wool in different forms and compete in different markets. It also offers a value-add for low quality wools, which would be heavily discounted as greasy wools. While not necessarily applicable here, it is important that the Australian industry remains aware of different strategies employed by others in the global wool market.
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