Interview with David Ritchie

David Ritchie
David Ritchie

Wool buying and exporting is a mature business...
David Ritchie is President of Australian Council of Wool Exporters and Processors (ACWEP) and has vast knowledge about the woolen market. He shares his views about the wool market with Fibre2Fashion Correspondent Manushi Gandhi. Synopsis: The Australian Wool Industries Secretariat Inc (AWIS) comprises the following organisations: * Australian Council of Wool Exporters and Processors Inc. (ACWEP) * Private Treaty Wool Merchants of Australia Inc (PTWMA) * Federation of Australian Wool Organisations (FAWO) The ACWEP works in the favour of wool buying companies and is well recognised by Government as well as many industry sectors. The council was formed in 2006 by the merger of two other bodies. Today, most Australian wool is exported in the greasy form, or as scoured or carbonised wool. Marino wool of Australia enjoys a good status in the international textile market. David Ritchie is the General Manager of Victoria Wool Processors, a scouring and carbonising company based in Laverton, Melbourne, and is the President of the Australian Council of Wool Exporters and Processors (ACWEP). He is a Director of the Australian Wool Testing Authority, where he is a Member of the Audit and Finance Committee. Excerpts:

Wool is a seasonal commodity, so the demand goes very low in summers. How does this affect the wool industries? And what is the alternative for industries to this seasonal demand?

The seasonality of demand for woollen garments is being addressed by technical and promotional work to develop and promote products which are suitable for summer wear. This includes such things as the development of lightweight woollen fabrics and promotion campaigns such as those for "Cool Wool". However, the wool processing pipeline is quite long as wool goes through a number of processes before the greasy wool that comes off a sheep’s back is finally woven into fabric and made up into garments. As such, the demand for, and supply of greasy wool continues throughout the year in the major wool growing countries. This enables wool processors to continue their operations throughout the year. Supply from Australian farms varies throughout the year and there is sufficient supply to have weekly wool sales other than for three weeks in winter and for three weeks at Christmas.

How does ACWEP function and what are the major achievements of the council?

ACWEP addresses matters of importance to Australian wool exporters and processors, both in the short term and in the longer term. It does this by liaison with other wool industry sectors, with Government and with other organisations, as required. This includes responding to unexpected issues as they occur and researching and addressing issues of longer term importance. In recent years, ACWEP has: * Negotiated a revised set of Terms and Condition for Trade in wool for China with the Nanjing Wool Market. * Achieved a major reduction in the proposed increases in some services for wool exporters that were proposed by the Australian Government. * Worked with the International Wool Textile Organisation (IWTO) to achieve better requirements for the export of wool into the EU. * Participated in Joint Working Groups with the Chinese wool industry and the Indian Governments.

How does the quality of Australian wool differ from the rest?

Wool is a very variable product, ranging in fibre diameter from less than 12 microns to over 40 microns. In general terms, the use of wool is largely determined by its fibre diameter. Fine wool, for example less than 25 microns, is used for apparel, while the coarser wool is used for interior textiles such as curtains, seat covers and carpets. The finest wool is used to produce the highest quality garments for men’s and women’s wear. The Australian wool industry is the largest in the world and it is the largest producer of Merino wool (up to 24 microns) for apparel wear. It is expected to produce 345 million kilograms (mkg) of greasy wool this season (July 2012 to June 2013) of which approximately 81% will be from Merino sheep. Sheep are also used to produce meat or milk. Such sheep invariably produce coarser diameter wool which may also be of a lower quality.

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.

What are the innovations in the woolen industries that are supposed to bring a change in the global market?

This is not an area of expertise for the Australian Council of Wool Exporters and Processors. This work is conducted, or funded, by Australian Wool Innovation. Such work covers sheep breeding, sheep health, predator control, pasture management and environmental / sustainability issues.

While exporting wool what are the main points that need to be taken care of?

Wool buying and exporting is a mature business that has been in place in Australia for over 200 years. The main factor to be attended to is for wool growers to ensure that their wool is well “classed” after shearing. Wool varies in quality both on a sheep and between sheep. Wool “classing” is the skilled amalgamation of the various forms of wool into a number of uniform parcels which are suitable for sale. This provides wool buyers with the greatest opportunity to buy wool which meets the wool requirements of Australia’s processor clients. There are no Australian Government requirements for exporting wool. However, the Governments in Australia’s customer countries normally require that a Health Certificate issued by the Australian Government which states the wool is from sheep that are free of certain diseases. This is not a problem, as Australia is free of the diseases which the customer countries are concerned about.

Which region is considered the most favorable for the export of Marino wool from Australia?

Wool used to be grown in all parts of Australia, except in the area known as the Northern Territory. Today, most wool is grown in the southern half of Australia. The State of New South Wales is the biggest wool producing area. As over 95% of Australia wool is exported, wool is exported from all wool producing regions in Australia. The greatest specialization occurs with exports to Italy, Australia’s third largest export destination after China and India. Italy specializes in importing Australian superfine wool. 86% of Italy’s wool imports this season are of 19 microns and finer in diameter. Superfine wool is best grown in areas which have reliable and good rainfall. There are a numbers of areas that are well known for their Superfine wool production. These include (but are not restricted to) the New England, Mudgee and Goulburn-Yass regions in New South Wales, the Western Districts of Victoria; and Tasmania. India specializes in the not quite so fine Merino wool. 66% of their wool imports were from 20 to 23 microns. This wool is grown in most parts of Australia. 84% of Australia’s wool exports to China were less than 24 microns.
Published on: 03/04/2013

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of