Interview with Mr Geoffrey Kingwill

In large parts of rural South Africa the economy is agriculture based. In a significant part of these areas, farming with wool sheep is the main enterprise. As a result there are large areas where wool growing is a major economic driver for the local economy and has a significant socio economic impact.

True.

Cape Wools is a non profit organization that is funded by a Wool Industry Trust. The 4 main services that Cape Wools provide to the industry are;

-Research and Development

-The promotion of production through a Production advisory service

-The collection and dissemination of statistical information about the South African industry

-Promoting the consumption of wool products

In most parts of the world the wool industry is under some strain. There are exceptions to this and China must be the most significant exception. As far as production is concerned most of the other Southern hemisphere countries that produce similar apparel wool to South Africa, are having a significant reduction in production. South Africa is however bucking this trend and this is because our wool growers have a significant income (between 60 and 75%) from meat and this has helped to keep our wool growing enterprises competitive with other possible farming enterprises.

South African produces mainly merino wool for use in the apparel industry. Cape wools as our South African wools are known are well known for the high standard of clip preparation. Our coefficient of variation of length is of the lowest in the world. Our merino wools also tend to be slightly over crimped which give them some unique spinning characteristics. As a result many spinners include a percentage of South African wool in their yarns to get the properties that they are after.

South African wool is sold to buyers all over the world with the main buyers being China with about 50% of the South African clip followed by Italy with about 15% and India and the Czech Republic with about 10% each.

I don’t think that there are any specific blockages impairing the popularity of South African wool, but with China being such a major buyer of wool, the distance to China might be a bit of a disadvantage for South African wool. The most significant factor hampering the growth of wool production in South Africa I think are the losses that growers suffer as a result of predators killing their lambs. These losses have been increasing steadily and the reduction of these losses is a huge challenge facing the industry. As far as the growth of wool consumption in general is concern I don’t think that we have been doing enough promotion of woolen products in the recent past. This seems to be changing and South Africa intends to lift its level of spending on promotion to help correct this.

The world recession caused the price of wool to drop by 50%. As you can imagine this is devastating to the income of wool growers. Fortunately most of the growers see this as a phase that we all have to get through, and so there does not seem to be a significant swing from wool growing as a result of the poor prices. The fact that there has been some recovery in the price of wool has also helped keep growers positive about the longer term prospects of the wool price. The wool industry does not get much government support so there is not anything specific that the South African government has done to alleviate the plight of the wool industry.

Through the production advisory service Cape Wools is continuing to look for ways of improving the efficiency of wool growing in South Africa in an attempt to mitigate some of the effects of the recession. At the same time we are also keeping the growers informed of the reduction in production in other apparel wool growing countries so that they realize that when demand returns to normal than there will be significant upward pressure on the price of wool.

Fortunately in the early part of the global financial crisis in late 2008 when the wool price was at its lowest the South African rand weakened and as a result the drop in rand price of wool was cushioned slightly. Since then, as you mentioned, the rand has shown great strength which is obviously not good for South African exporters. Although no one wants a weak rand we as wool grower would not mind if it was slightly weaker.

Yes, I think there will be a benefit for our industry but that benefit would have been a lot more if 2009 was not such a poor retail year in so many of our consumer countries. As such it will be difficult to determine how much the wool industry will benefit from the initiative. As I said earlier I think that consumer awareness about the wonderful properties of wool needs to be raised and any initiative that contributes to this is a good thing. Wool growing is also a very environmentally sustainable practice and we hope that the year of the natural fiber will help raise consumer awareness of this.

You're welcome!

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