Organic wool may change face of industry

25 Aug '08

3 min read

The textile industry of Uruguay is in for a boom due to a strong global demand for organic wool and the readiness of consumers to pay a bonus for it.

Mr Pedro Otegui, one of the leading wool and textile exporters of the country, noted during a conference in the framework of the opening week of the 2008/09 wool clip season that this was “a great challenge for Uruguay” and that the industry must seize this opportunity to cater to a market that is likely to increase to over 1.5 billion people.

“Consumers are increasingly demanding quality and relieved that what they are buying does not alter or cause harm to the environment”, said Otegui, who strongly believes that this growing demand for organic wool would bring about some major changes in wool farming and industrial processes of textiles.

Companies in the business are hoping to receive an organic industrial license which would serve as a necessary certification to a market that is willing to pay extra bonus. As such, it is also hoped that in a short period of time, the country would be able to supply the world with Uruguayan wool stamped with the organic seal.

However, there are also some major problems facing the wool sector. Although it was recently announced that the 2008-09 clip is likely to reach 42 million kilos, farmers and other representatives from the textile industry expressed fear about the falling competitiveness, soaring costs, adverse exchange rate and a burdensome tax reimbursement system.

The country is set to have an annual turnover of $360 million but experts have suggested for the elimination of a 1 percent sheep sales tax collected by the regional Governments.

Even Mr Otegui asserted that “the meager value of US dollar, increase in taxes, public utility rates and a lowering of the tax reimbursement system are increasingly punishing sheep farming and industry. And this is particularly intense when all the production is exported and there's no domestic market to help absorb and also an unprecedented appreciation of the peso.

Some of the recent decisions taken by the Government are so unrealistic that a large number of farmers have been forced to abandon their activities in the wool industry and relocate in to better and prosperous undertakings.

It is therefore quite clear that unless adequate policies are adopted by the central authorities for uplifting the industry, high global demand or even a premium price would not help fetch the required growth.

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