WoolProducers Australia initiates new feasibility study to protect sector

The Australian wool sector generates $3.5 billion in wool exports annually, but there’s danger on the horizon.

Risk mitigation is behind a feasibility study on returning first stage wool processing to Australian shores.

The study, which will look at bringing back scouring, carbonising and top making locally, was initiated by WoolProducers Australia and will look at the opportunities for domestic and diversified wool processing.

China’s ban of wool exports from South Africa this month due to an outbreak of foot and mouth disease in that country shows how exposed Australia could be if there was a biosecurity issue here.

Australia generates $3.5 billion in wool exports annually, but 93 per cent of the clip is exported in an unprocessed state as greasy wool.

If wool was first stage processed here, it would still be able to be exported to China under current protocols from that country.

WoolProducers chief executive Jo Hall said the wool industry was one of the most exposed and threatened sectors in Australian agriculture due to its “heavy reliance on a small number of early-stage processing destinations”.

“If the feasibility study demonstrates that diversified early-stage processing (either domestic or diversified offshore opportunities) is viable, the market diversification opportunities for Australian wool will increase exponentially with the ability to export scoured and carbonised wool and wool tops to a diversified range of spinners,” Ms Hall said.

“The current choke point in the long wool supply chain is at the early stage.

“This is apparent considering that globally, there are about 100 early-stage processors, 5000 spinners and dyers and about 50,000 knitters and weavers.

“Enhancing diversification of early-stage processing capacity (including domestic) would be a sensible risk management measure to provide increased trade stability to Australian wool growers and those involved in the trade and export of Australian wool.”

The study will be completed by Deloitte Access Economics and will involve the company’s economics and trade experts.

Key wool industry bodies will be part of the steering committee including Australian Wool Innovation, the National Council of Wool Selling Brokers of Australia, the Australian Council of Wool Exporters and Processors, the Australian Wool Testing Authority, the Australian Wool Exchange and Austrade.

“The changing trade patterns, the risk of emergency animal diseases, Australia’s desire to increase its domestic manufacturing capacity and supply chain expectations on sustainability and transparency are key considerations that will guide the work of the feasibility study,” Ms Hall said.

“WoolProducers look forward to delivery of the final report to determine what steps can be taken to value add, and limit risks associated with our wool exports,” Ms Hall said.

The report is due to be completed by September this year.