Inside the collapse of Australia's once-mighty wool empire
Australia's wool industry has fallen from national icon to bit player, yet passionate producers refuse to give up on the natural fibre that helped build a nation.
When you think about the common thread that has woven the fabric of Australia, it’s hard to go past the wool industry.
Put simply, few things have spun the national story quite like it.
The arrival of just 26 Spanish-influenced, Cape of Good Hope-bred Merino sheep to Sydney Cove in 1797 – less than a decade after the First Fleet – ignited an industry that would shape the fortunes of a young nation. For generations, long before synthetics and fast fashion, wool wasn’t just a fibre – it was the lifeblood of the economy. Australia’s wealth quite literally rode on the sheep’s back with wool for a long time our No. 1 export.
So central was wool to our identity that a Merino ram proudly featured on Australia’s shilling from 1938 to 1964 – replacing the coat of arms in a symbol of national pride and prosperity. In Waltzing Matilda – our unofficial national anthem – the “jolly jumbuck in the tucker bag” became a cherished symbol of bush life, sung in school halls and sporting stadiums alike. And in 1890, Tom Roberts captured it all on canvas with Shearing the Rams, a painting that still stirs something deep in the national psyche – a reminder of the grit and grandeur of yesteryear.
But how things have changed.
Fast forward to 2025 and wool, once the proud fibre that carried the nation, is now but a bit player in Australia’s export story – overshadowed by the dominance of mining and coal.
Even within agriculture, it sits well down the list behind the likes of wheat, canola and beef. And with the rise of high-performance synthetics into a market that traditionally focused on luxury suits and premium knitwear, the wool industry has become a shadow of its former self.
Wool now accounts for just 1 per cent of the global textile market — a stark reminder of the fibre’s shrinking footprint.
In Australia, the national sheep flock has been in long-term decline, despite the odd bright spot, worn down by decades of drought, low prices and competition from more profitable land uses.
In 1991–92, 181 million sheep were shorn, producing more than 800 million kilograms of wool. This season, just 63.2 million sheep are expected to be shorn, yielding around 279 million kilograms — a staggering 65 per cent fall in production over a little more than 30 years.
That’s the official view — though some in the industry say even those figures are optimistic.
IN A SPIN
WHILE today’s Merino breeders continue to produce some of the highest-quality wool in the world, global consumer demand simply hasn’t kept pace, and prices have suffered.
A recent spike has the whole industry rejoicing, but the Eastern Market Indicator — the benchmark average of wool prices sold at auction — has largely hovered between 1100c and 1200c a kilogram. For perspective, during the wool boom of the 1950s, wool fetched the equivalent of 7000c/kg, and in 1988 peaked around 3550c/kg.
Analyst Andrew Woods offers an alternative view to the narrative of a shrinking consumer fan base dragging down Australia’s wool industry.
He argues the real driver has been economics — other farming enterprises, particularly cropping, have simply outperformed wool financially, prompting a shift away from sheep.
Add to that the growing difficulty in finding labour, the physically demanding nature of the work and the year-round commitment required to run sheep, and it’s no surprise cropping has become increasingly attractive.
“I’ve been told that especially in Western Australia, it’s hard to get and keep labour to work with sheep, whereas with cropping, you can just extend your program to more hectares, and get January off to go to the beach with the family and not worry about checking stock waters,” Woods says.
“Cropping has also pushed into wetter climates and drier climates thanks to better management methods, taking the place of running sheep.”
And while advances in cropping have boosted productivity through improved varieties and smarter farm management, Woods bluntly argues the wool industry hasn’t kept pace.
That’s why, he says, wool growers should spend less time worrying about prices — and more time focusing on what they can control: the cost of production.
“You don’t see croppers worrying about the price they are going to get paid from season to season but you do see them working to be more productive and manage things they have control over,” Woods says.
FALLING OUT OF FAVOUR
Woods tracks the state of the industry as best he can using figures from the Australian Bureau of Agricultural and Resource Economics.
Last season, the total gross value of wool was just half that of sheepmeat, a quarter of beef, and an eighth of cropping — a stark indication, he says, of how far wool’s standing has fallen.
He believes the industry will continue to contract and should “plan to be smaller.”
“Just because you are a small player as an industry doesn’t mean you can’t be a small, smart player,” Woods says.
Woods says he has clients — both big and small — who are “happily in sheep and growing wool.”
“But there’s a big slab of farmers who don’t see the value in it and have chosen to do other things,” he says.
A hardened core of wool growers remains — producers who, despite being battered and bruised by years of volatility, continue to run Merinos in their paddocks.
Few illustrate this better than Mutooroo Pastoral Company, pioneers of wool growing since 1888, with operations spread across 2.3 million hectares of station country on the South Australian-NSW border.
Today, the company runs cattle north of the South Australian dog fence and manages between 60,000 and 75,000 sheep that not only survive but thrive in the sometimes challenging pastoral environment.
At its helm, James Morgan has steered the business through decades of highs and lows, with significant impacts on the bottom line. Yet, he says, Merinos remain central to their operations for a simple reason.
“The country we run is best suited to Merinos – it’s as simple as that,” he says.
Mutooroo’s sheep are big – collectively they produce wool to fill about 2000 bales annually, but their physical scale also delivers a second stream of income, with strong demand for surplus sheep in the red-meat trade.
“There’s no doubt that the surplus sheep sales add to the profitability of wool growing,” Morgan says.
The company continues to strive for the best quality wool possible. Despite the industry’s turbulence, Morgan remains as committed as ever to Merinos and their dual purpose. His stint on the board of the industry’s research and development body, Australian Wool Innovation, underscores that passion.
“I have a fundamental belief in the product (wool) and the opportunities for the industry and the dual ability of Merinos to produce fibre and protein,” he says.
“It’s an important enterprise that occupies large areas of Australia where really there is no alternative and there’s a lot to be excited about in the industry.”
’BARELY COVERING COSTS’
Sheep producer Gemma Chandler, based on the NSW South West Slopes near Wallendbeen, runs Merinos as part of a mixed-farming operation with cattle and cropping.
Alongside her parents, Tracey and Bruce Wilkinson, and husband, Jake Chandler, she has seen wool shine at times. Between 2018 and 2020, in a rare sweet spot, wool was the top earner in their farming mix.
But with wool’s trademark price swings, that is no longer the case. Chandler has lifted cattle numbers and cut the sheep flock from 2500 breeding ewes, plus young stock, to about 1200 — a third of which are now joined to produce prime lambs.
Her sheep are carefully managed: they are not mulesed, are rotationally grazed to control worm burdens and are shorn every six months.
“We have put a lot of work into selecting a low-input animal,” Chandler says.
“We shear six-monthly now which I love as a management option because it has eliminated the need for long acting fly treatment, we get a more regular cashflow and I think the sheep are just healthier in general as a result.”
Still, even with the effort to breed a viable and sustainable Merino, the returns don’t always reward the investment.
“At the moment our Merino enterprise is covering costs but our cattle are making two and a half times as much per dry sheep equivalent,” she says.
“Last year one of our wool cheques only covered the cost of shearing and the crash in livestock prices certainly didn’t help.
“We like to keep a close eye on how each of our enterprises is performing and if wool production becomes more profitable we would certainly increase our flock size.”
Chandler says she would love to see wool prices return to around 1800c/kg, but remains philosophical about the market’s natural ebb and flow.
With a century of Merino breeding in her family’s genetics, Chandler has no plans to step away from wool anytime soon. She says it would feel like breaking with tradition not to have sheep filling bales with white, bright fleeces on the farm.
CHAIN REACTION
While subdued wool prices are prompting some farmers to cut back sheep numbers — or exit the industry altogether — they’re not alone in feeling the pressure.
The entire supply chain is under strain.
Australia now has just two remaining wool processors, with Adelaide-based Michell Wool the largest and oldest.
Established in 1870, the company has weathered the highs of the 1950s wool boom and now operates in a far leaner, almost hand-to-mouth environment.
Born into a wool legacy, current executive director and owner David Michell has plenty of skin in the game. The company runs two processing facilities — one in Adelaide and another in Suzhou, China — turning raw wool into products used in everything from upholstery to clothing.
It’s a tough business to keep in the black.
“While growers are clearly facing issues with drought and low prices, it’s not easy for anyone in the supply chain at the moment,” Michell says.
“Wool has become a niche product that needs to find niche markets.”
So where did it all go wrong for wool? Michell’s view is unequivocal.
“Wool lost its place in the 1990s with the advent of polyester which was cheap and easy to make,” he says.
The casualisation of clothing hasn’t helped wool’s cause either, with demand for suits — especially those commanding a premium over synthetic or cotton alternatives — continuing to decline.
Add to that a backdrop of global uncertainty, trade tariffs and conflicts in the Middle East and between Russia and Ukraine, and consumer confidence has taken a hit.
“We only buy wool now to fill an order,” Michell says.
“That’s true along the whole supply chain, flowing back from retailers to manufacturers to processors like us to growers.”
Michell believes wool has a future, but says what that future looks like may be very different from how the fibre has been used in the past.
‘REWARDS IN THE LONG RUN’
As chief executive of Australian Wool Innovation — the industry’s research, development and marketing body — John Roberts has his hands full.
Jointly funded by grower levies and federal government contributions, AWI is tasked with everything from shearer training to global marketing campaigns, all aimed at lifting the wool price.
A former wool buyer, trader and processor, Roberts also hails from a Merino breeding operation at Binalong in NSW.
His job includes overseeing AWI’s marketing budget, which accounts for around 60 per cent of the organisation’s total expenditure.
He believes investing in high-end fashion promotion remains a smart strategy.
“If you are marketing at the top end of the fashion triangle, that message trickles down,” Roberts says. “At the same time, we have pivoted in our approach – it’s not turning away totally from luxury (high-end fashion) yet it was recognition that we were so dependent on fashion and suits and sweaters at the high end at a time when much of the world is shifting towards casualisation.
“We’ve been able to draw on the technical aspects of wool that make it perfect for sports and leisure wear and we have done a lot in that space.”
Still, there’s a sense of frustration at the prolonged period of low wool prices and the pressure it’s placing on the national flock.
“If wool prices were higher, then producers would keep sheep on, but there are competing land uses and the return on investment is not as appealing for running Merinos at the moment,” Roberts says.
“Wool is promoted as the world’s best fibre, because it simply is.
“It has beauty in its softness and handle, it has technical capabilities because it can breathe, it has moisture management and odour management and it has eco credentials.
“We know all this but if we can’t build demand for wool, then it’s all for nothing.
“We need to get the wool price up to keep wool growers in the industry. I remain confident that the people who stick with Merinos will be rewarded in the long run.”
BORN TO BE WORN
At the end of the line, it’s consumers who hold the cards — and retailers who hear first-hand whether wool is in or out.
And if the wool industry is looking for retail champions, it need look no further than RB Sellars chief executive Jim Gall.
Relatively new in the role — he’s been at the helm for about 18 months — Gall has a bold vision to increase the amount of wool in the company’s clothing range. While RB Sellars is rooted in the rural market, it’s increasingly reaching peri-urban customers as well.
Currently, about 10 per cent of its range includes wool. Gall wants to see that grow to 30 per cent.
Gall is the first to admit he has a vested interest in wool. He runs about 3500 Merino ewes on his 1100-hectare property near Euroa in Victoria’s North East region — and, with a laugh, concedes he also keeps crossbred ewes for prime lamb production to help fund what he jokingly calls his “wool-growing habit.”
Well known within agricultural circles, RB Sellars operates 20 stores across Australia and is expanding into New Zealand, the US and the UK. Its clothing is designed to be authentic and hard-wearing.
Later this year, the brand will launch a new range featuring a 95 per cent wool, 5 per cent Nuyarn blend. Already used by global outdoor brands like The North Face, Nuyarn will appear in RB Sellars’ next-to-skin garments and even work shirts.
The blend, Gall says, will deliver greater durability without compromising the natural performance and comfort of wool. But enthusiasm for wool is tempered by the stark reality that Merino sheep numbers are falling fast. Decades of low returns have driven many producers out.
In a frank assessment, Gall says the industry itself bears some responsibility.
“We’ve failed to move or have been too slow to move with the times,” he says.
“The industry has not done a great job in promoting that wool is for everyone.
“It is an elite fibre for so many reasons – it’s natural, it’s sustainable, it can keep you warm or cool – but that doesn’t mean it is only in the realm of high fashion and expensive suits and in some ways, we have been our own worst enemy.”
RB Sellars is determined to challenge that perception, one jumper and one work shirt at a time, by targeting Australian consumers Gall says the industry has largely forgotten.
“Growers have a chance to tell a really authentic story,” he says.
With an advertising background, Gall understands brand value. In 1990, the Woolmark symbol ranked among the world’s top 10 logos. Today, it would not make the top 500.
“I think that we need to decide as an industry that we want to target a sector that is in the middle of the market – we don’t want to be a Temu or a Shein but we don’t need to be elite,” he says.
“We want to be positioned as quality, affordable and accessible.
Gall would love to see every Australian with a few woollen garments in their wardrobe.
So too would the Merinos growers still filling bales, waiting for wool to reclaim some of its former glory.
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