Farmer organisation Ulster Wool has said it will be unable to make additional payments to suppliers of certain types of wool for last year's supply.
The organisation has also warned there will be no upfront payment for 2021, saying holding off will ensure farmers receive a better price.
The international wool market only has started to recover over the last few months following the impact of the Covid-19 pandemic. The average auction price is now around 67p/kg compared to 50p–55p for most of the last 12 months.
Chief executive Andrew Hogley said: “Given the challenging year we have had, Ulster Wool is unable to make any additional payments on some Fine and Medium grades where we made an upfront payment at the start of the 2020 season. Mule and Blackface producers will, however, receive a balance payment for the wool they delivered last season.
"A healthier stock position, reduced cost base and recovering auction prices put Ulster Wool in much stronger position to deliver better value for our producers in 2021. All payments this coming season will be made in arrears.
“Also, in order to support our service offering, we are abolishing onward carriage fees at all of our collection sites from this season. Ulster Wool’s shearing courses are also resuming this year. We see this as an essential part of the support we provide for the industry.”
Wool market crash
The impact of the Covid-19 pandemic has been well documented with the business going through the most challenging 12 months in its history.
The closure of large parts of the economy as Covid restrictions took hold severely impacted global demand and resulted in significant oversupply through much of 2020. When the first Covid lockdown was imposed, the scouring plants in the UK closed and manufacturers stopped processing. Exports were also put on hold.
Wool marketing co-operatives faced a situation where, in effect, there was no market for the product and as a result, the 2019 season closed with 11 million kilos of unsold stock in the UK.
Ulster Wool chairman Brendan Kelly added: “Ulster Wool is a cooperative and we firmly believe that the collaborative marketing of the Northern Ireland clip is the best way to deliver value for producers.
"Over the last year, we have lobbied extensively for support for the industry with our partners in the UFU and NSA. At the start of April, DAERA announced a support package for producers - this was based on the evidence Ulster Wool provided to the Minister that demonstrated the impact of Covid on prices.
“In 2020, we handled less wool due to a small number of producers not seeing value in delivering their wool. This in turn had a negative impact on our operating cost per kilo. The more we handle, the more cost-effective our operations become which in turn allows us to return more value to all producers.
"Every kilo of wool handled makes an important contribution to supporting your organisation ensuring we can continue to provide a high standard of service to all producers, drive demand with downstream manufacturers, work with universities and industry on new product development and finally, continue to represent your best interests as wool producers."