Sheep farmers frustrated as wool prices slump and don’t cover cost of shearing

Federated Farmers Bay of Plenty provincial president Brent Mountford says wool prices are dismal. Photo / Alex Cairns

Fears are rife the wool sector could turn into a “cottage industry” as “everyone” makes money “except farmers”. Disgruntled farmers say income from dismal wool prices only covers half their shearing costs, while sheep numbers have fallen by 50 million. Calls for change to salvage the industry have heightened as agriculture ministers aim to “restore confidence”. This is the first installment in Tough Times on the Land - a series by Carmen Hall exploring the changing face of farming.

“Tragic” is how Federated Farmers Bay of Plenty provincial president Brent Mountfort describes the impact of low wool prices.

Mountfort received $2500 this year for his wool clip but it cost him $5000 to get the shearers in.

“It wasn’t poor wool either and we shore everything because you are doing it for health and animal welfare reasons.”

Federated Farmers Bay of Plenty provincial president Brent Mountfort. Photo / Alex Cairns

Sheep were an “iconic” animal for New Zealand in terms of tourism and history, important for the economy and the backbone of farming.

“Everyone is making money out of wool except the farmers,” Mountfort said. “We get paid basically nothing for it. Without us producing the wool, the rest of the chain won’t exist either.”

Federated Farmers meat and wool chairman Toby Williams said there would not be “any sheep left to have an industry” if nothing changed.

“There’ll just be a cottage industry and that is my major concern.”

In 40 years, New Zealand had lost 50 million sheep and wool prices had plummeted two-thirds since 2012.

The national flock had fallen from about 70 million in the 1980s to 21 million, which he said was because of changes in land use and cheap synthetic fibres that “out-marketed” wool.

Williams spent $80,000 in the past year shearing his sheep and lambs for a wool return of $40,000.

Federated Farmers national meat and wool chairman Toby Williams.

In his view, the sector lacked “blue-sky thinking and young, forward-thinking people”.

Williams said it had “become more siloed” in the couple of decades since the Wool Board ended.

“While there is lots of cool stuff happening none of it is happening at a scale that will move the needle for farmers to keep shearing.”

He said there was an opportunity to capture value not if, but when wool came right.

“We have a generation now who are anti-plastic, anti-petroleum and anti-synthetics so we need to market differently to make headway.”

Federated Farmers was working on a plan to “get the conversation going”, Williams said.

“Ultimately wool is an incredible fibre and it has to be rewarded... I’m an optimistic person. We are at that point now where farmers are either going to give up or back a good idea.

“If not now when? The industry is on a massive downhill slide at the moment.”

Farmer’s hope for industry rebounds

Katikati sheep and beef farmer Rick Burke said back when his father farmed after the war, wool was a pound for a pound: “It was like gold and look where we are now”.

“If the Government can give the industry a leg up to help scale up and market wool... I think the industry will rebound.”

Burke said the research and development from the past 10 years could be used to revive the sector.

He believed good sheep farmers would hang in there for the meat value as genetics and productivity had also greatly improved.

‘Confidence needs to be restored now’

Associate Agriculture and Rural Communities Minister Mark Patterson acknowledged the Government had challenges to address such as wool prices not covering harvesting costs and farmers looking at alternatives to wool.

“Their confidence needs to be restored now and the best way is by increasing their returns. The next six months are vital, as farmers will be making decisions on what stock to have for the coming year.”

The first National Woolshed Roadshow organised by Agriculture Ministers was in Wairarapa.

Increasing global demand for sustainable materials over synthetics presented an opportunity for New Zealand wool to show global brands “natural fibre can be the solution”.

Patterson attended the first National Woolshed Roadshow with Agriculture Minister Todd McClay and Associate Minister Andrew Hoggard in Wairarapa last week and said there was a strong turnout with a positive response from the farming community.

McClay said the sector was critical in the fabric of rural and regional communities.

“New Zealand’s food and fibre sector is the backbone of our economy, contributing over 80 per cent of our goods exports to feed an estimated 40 million people worldwide.”

Innovation and investments

Patterson said a Government initiative from the coalition agreement with NZ First would see woollen fibres used where practical and appropriate in offices, homes, schools and other buildings.

The new building under construction in Rotorua for Te Uru Rākau - New Zealand Forest Service would use New Zealand wool carpet tiles.

Meanwhile, Wool Source - the commercialisation arm of New Zealand’s Wool Research Organisation - was developing colour pigments using wool.

Chief executive Tom Hooper said there was a “clear pathway to having a commercial product” and the innovation had international interest.

Pigments were a way of applying colour to a wide range of materials.

Wools of New Zealand chief executive John McWhirter said an oversupply of wool had deflated prices and the auction process did not necessarily achieve the best outcome on the international market.

“It’s economics 101... if you want to fix it now, you have to fix the structural base on how wool is transacted,” McWhirter said.

In his view, the closure of the Wool Board and lost marketing opportunities, particularly for flooring, had a major impact.

In 1995, wool carpet had about 90 per cent of the soft floor coverings market globally but in subsequent years that dropped to 14 per cent.

Wools of New Zealand chief executive John McWhirter with a wool tile.

In 2021, Wools of New Zealand joined forces with CP Wool and owns the highly-regarded New Zealand FernMark carpet brand.

Wool carpet sales had since increased to 18 per cent of the carpet share and Wools New Zealand hoped to move into Australian and United Kingdom markets.

“So we know it works,” McWhirter said, “but it needs investment if you want to get out at speed”.

The farming owners of Wools of New Zealand did not have the cash so the investment could come from government loans or funding or other investors.

“We are doing the best with the resources we have got but we simply can’t go at pace. That is as blunt as it is.”

Carmen Hall is a news director for the Bay of Plenty Times and Rotorua Daily Post, covering business and general news. She has been a Voyager Media Awards winner and a journalist for 25 years.