By Andrew Woods, ICS | Source: Statistics NZ, ABARES, Beef + Lamb NZ, IWTO, AWC, WI, AWPFC, ICS
Mecardo had a look at the South African wool clip, one of the world’s major sources of merino wool, a month ago. This week, Mecardo looks at the New Zealand woolclip, another large producer and exporter of wool. NZ wool production continues to decline, in contrast to Australia where production is more stabilised.
If you simply ordered a load of grain with no specifications, you would not necessarily know what sort of grain would be delivered – feed wheat, biscuit wheat, high protein wheat or even coarse grains. The wool industry is similar to the grains industry, with the comparison of the New Zealand wool clip to the Australian clip an excellent demonstration of the wide range of fibres produced under the name of wool.
Figure 1 shows a breakup of the New Zealand wool flock by sheep breed. Nearly half of the flock is Romney, with only 4% of the flock Merino and some 2% Corriedales. The breed make up is nearly the inverse of the Australian flock, which is dominated by merino sheep with very few carpet wool sheep. The merino proportion of the NZ flock has not varied greatly during the past 30 years.
Figure 2 shows how this breed composition of the flock translates into fibre diameter distribution. The distribution shown is an estimate by Independent Commodity Services P/L. Detailed wool production data by micron category in New Zealand is limited by both the reluctance of the industry to publish such data and the large proportion of wool that is sold privately. In contrast, the Australian wool industry is very well reported in supply terms (by AWEX and the AWTA) and in price terms (by AWEX), a point that should be noted by those who urge change in the selling structure of the industry.
As shown in figure 2, the big micron categories in New Zealand are clustered around 38 micron (in contrast to the Australian market where the 19 and 20 micron categories are the main sources of volume). Merino production in New Zealand represents a small proportion of volume at the very fine end of the distribution. While New Zealand is a large wool producer, the wool goes mainly to the carpet industry. In the grains analogy begun above, in terms of wool, Australia produces high protein wheat to New Zealand’s maize.
So, what about trends in production? Figure 3 compares Australian and New Zealand greasy wool production from the mid-1970s onwards. The New Zealand clip peaked earlier - in the first half of the 1980s - than the Australian clip. From around 1990 the Australian clip started to fall and the two clips followed the same trend for the next 20 years. Both clips have fallen by 60-70% from their respective peak volumes of the 1980s.
In recent years, the New Zealand clip has continued to fall in volume. It is projected to be down 20% on 2010 volumes this season while the Australian clip is expected to be 3% below 2010 levels.
While the New Zealand wool clip is vastly different from the Australian clip in terms of fibre diameter, the volumes of the two clips have followed similar paths for the past 25 years. Wool production (and sheep numbers) has been declining since the late 1980s in South Africa, New Zealand and Australia. While the South African and Australian wool production looks to have stabilised, the New Zealand clip is still trending lower. The problem of competition from other farm enterprises (most notably dairy in New Zealand) is an international one for the wool industry. From an international perspective the wool industry needs production to stabilise, thereby providing a stable base for the supply chain. Falling volumes in New Zealand obviously challenge this stability.
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