The price for last year’s wool has been set at just 32p/kg as the wool marketing board struggles to sell off a nine million kilo backlog.
The global market for crossbred wool has been shut since February and remains closed wiping out the February to May peak selling season.
Prices as low as 15p/kg
As a result, the Wool Board, which sells wool on behalf of British Wool and Ulster Wool producers, has around nine million kilos of unsold stock out of a total 2019/2020 clip of 27 million kilos.
A spokesman said: “Given the situation we find ourselves in, we have had to place a value on this unsold stock which is at a significant discount to the last prices sold.
As a result, the average price paid to producers for the 2019/20 clip will be 32p/kg. Where applicable, 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, 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 2019/2020 unsold stock at a higher price than our assumed value we will make a further payment later this year in relation to the 2019/2020 clip, depending on the economic outlook at the time.
“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 Ulster wool downstream, further develop our new Ulster wool-rich product ranges and emerge from the Covid-19 slump ready to exploit a strengthening market.
“Without the consolidation of wool into commercial volumes through Ulster Wool and our continuing to market it more and more effectively, the prospect will be for lower prices indefinitely.
“Remember in the Republic of Ireland and Europe, where only spot buying exists, prices have historically been less than half of those paid to Ulster Wool producers.
Producers marketing their wool through British Wool and Ulster Wool, their organisation, represents the only realistic prospect of improved prices on a national scale in the medium and long term.
“We will emerge stronger from this period, so long as wool producers stay together and continue to back their organisation.”
‘Not enough to clear shearing costs’
The National Sheep Association (NSA) said it was disappointed to see the impact of Covid-19 on wool prices.
NSA chief executive Phil Stocker said: “It’s not fully clear how the reduced value of the remainder of the 2019/2020 clip will affect the overall value of a farmers wool delivered last year, but it would be easy to assume total fleece values might be down by 50%.
Cash flows will be affected, and many farmers will be faced with a bill from their shearing contractors but with no income to offset that.
“Although there are plenty of sheep farmers who do get real value from their wool most will at least expect it to cover shearing and wool handling costs.
“A fall of 50% of total value would, for most, mean total income not clearing costs.
“The NSA is very disappointed although we understand fully the reasons behind this situation. A lot of work has gone into increasing demand and values for wool and this will set things back.
“We are disappointed that British Wool, being treated as a Government Arm’s Length Body, has reportedly been unable to access the Governments Covid-19 support schemes and this will have had a big bearing on British Wool’s decisions.”