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Do you feel that the supply of natural wool is less and it’s unable to meet the market demand?
Australian (and global) wool production has fallen greatly over the last 20 years. Australian wool production in 1989 was 1,050 mkg compared with 345 mkg today. Production has fallen for a number of reasons.
* Wool prices fell sharply after the collapse of an Australian Reserve Price Scheme in 1991 which left a large stockpile of wool. This took ten years to be sold.
* Demand for all textile fibres fell during the 1990’s.
* Prices for other agricultural products became more favourable than those for wool. This included sheep meat, cereals such as wheat and canola and beef cattle.
It is thought that the current wool supply is close to current demand. The Australian wool research and promotion organization, Australian Wool Innovation, has a number of programs in place to help increase demand for wool.
The price of Australian wool is falling. What is the major reason for this?
The price of Australian (and other countries) wool is cyclical, being affected by supply and demand situations. This behavior is no different to other fibres.
The price is actually rising at the moment and has been since October. It had fallen in the 12 months leading up to October 2012.
Demand and price are also affected by the prices for other fibres, particularly cotton and polyester. If the price of wool gets too far above the prices for cotton and polyester, fibre substitution takes place and the demand, and price, of wool start to decline until the prices are in better balance.
What are the limitations of Australian woolen industries? And how can they be rectified?
Australian wool production has been falling for over 20 years. The main reasons in recent years have been:
* A reduction in demand which was due to competition from other fibres and to a period when there was very little wool promotion. This has now been reversed.
* Better prices for other agricultural products such as sheep meat, cereals and beef cattle.
* Falling wool production has also meant that there have been less funds to do research into sheep and wool production than occurred previously.
While there is now good investment in wool promotion, the future success of wool will be influenced by:
* The price for wool.
* Increasing the demand and uses for wool through ongoing promotion and the development of new products.
* Research that leads to a reduction in costs and an improvement in productivity for farmers who grow wool.
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