Wool has become a byproduct of the sheep farming industry in New Zealand, with the notable exception of high value merino producers, driven by low wool prices relative to lamb prices and high shearing costs.
on-farm production
New Zealand is the world’s largest producer and exporter of crossbred wool, second only to Australia in the volume of all wool exported. Crossbred wool (coarse wool ≥ 31.6 microns) made up the bulk of total wool production in 2004-05 (July–June), contributing 90 per cent to total wool production. In contrast, merino wool (fine wool ≤ 23.0 microns) contributed only 4.7 per cent and midmicron wools (23.1–31.5 microns) contributed only 4.2 per cent over the same period. The high proportion of crossbred wool currently produced in New Zealand directly relates to the emphasis that farmers put on sheep meat production. Typically, sheep breeds that produce heavier lambs and can withstand the New Zealand climate produce crossbred wool.
Wool production and exports – New Zealand
1984
1989
1994
1999
2004
-85
-90
-95
-2000
-5
Production July–June years
Total sheep numbers a
’000
69 739
60 569
49 466
45 680
39 271
Total wool production
kt
277
233
213
193
158
Average sale price
NZ$/kg clean
508
615
554
440
405
1984
1989
1994
1999
2005
-85
-90
-95
-2000
-6
Exports April–March years
Wool – volume
kt
–
230
252
173
157
Wool – value b
2005-06$NZm
–
1413
1346
782
667
a Opening numbers, June a year earlier. b Export values are expressed in 2005-06 prices: values have been deflated using the overseas trade price exports index for all pastoral and dairy products (OTPQ.SEA1BS1) – Statistics New Zealand.
Sources: Statistics New Zealand; Ministry of Agriculture and Forestry; Meat and Wool New Zealand Ltd.
Wool production has followed the downward trend in sheep numbers, falling by 43 per cent from 277 000 tonnes produced in 1984-85 (July–June) to 158 000 tonnes in 2004-05. MAF expects the opening number of sheep in New Zealand to fall from 39.3 million in 2004-05 to 38.5 million in 2009-10 and wool production to fall in line with the decline in sheep numbers. The continued move toward meat breeds and their genetic traits in the overall New Zealand flock is also resulting in a lower per sheep wool yield.
Average wool sale prices fell to their lowest level in twenty years during January 2006. The average sale price for clean wool fell by 13 per cent to NZ$4.05 a kilogram in 2004-05 year, while the average export (fob) price was NZ$4.63 a kilogram product weight, down 4 per cent from 2003-04.
Lower wool prices have also been driven by decreased demand for wool and wool related furnishings. In particular, reduced demand for retail carpet from New Zealand manufacturers, and changing tastes in home décor in overseas markets.
Higher lamb export prices have increased the emphasis for farmers to breed sheep for meat, and wool production has been affected by the costs of shearing in New Zealand, which on average absorbed 35 per cent of the farmer’s wool cheque in 2004-05, compared with 22 per cent in 1994-95.
marketing and trade
Wool exports have declined as a proportion of merchandise exports since the 1980s. In 1979-80, wool exports contributed 18 per cent of the total value of merchandise trade exports. However, between 1979-80 and 2005-06, wool exports’ contribution fell to just 2.1 per cent.
A significant change has occurred in wool export destinations over the past decade. Chinese markets remain important but now share a key position with European Union-15 markets. Exports to China have fallen from a share of 30 per cent in 1994-95 to 25 per cent in 2005-06, while wool exports to the European Union-15 countries have increased in share from 28 per cent to 39 per cent. Currently the five main countries that import New Zealand wool are China (25 per cent), the United Kingdom (12 per cent), Italy (11 per cent), India (8 per cent) and Belgium (7 per cent).
