Improve labour costs to open up Australian wool market

Labour costs must improve to open up Australian wool market

Livestock
Endeavour Wool Exports trading manager Josh Lamb believes the wool industry is in the midst of its worst year in 30 years.

Endeavour Wool Exports trading manager Josh Lamb believes the wool industry is in the midst of its worst year in 30 years.

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Improving Australia's wool market access is going to be a slow burn.

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Improving Australia's wool market access is going to be a slow burn but the challenges currently facing the industry may see wool growers transition out of it before things get better.

That's according to Endeavour Wool Exports trading manager Josh Lamb, who believes wool is in the midst of its worst year in three decades with fears this may set the Merino industry back 10 years or more.

And Mr Lamb said the reason wool was hurting so bad was because it was so vulnerable to outside factors.

"The wool market is unique because over the last 20 years, its biggest hurdles have always been non-industry specific issues, like the economic fallout of the Global Financial Crisis or political issues like the trade war between China and America," he said.

"They're not about wool specifically, but we become collateral damage and there's not much we can do about it."

He said the wool market had "suffered" since early last year at the hand of the China/US trade war.

And he said the issues that caused - from wool growers' returns being impacted to issues on the exporting front - had continued with the COVID-19 fallout.

"Really we've had 12-16 months of pretty serious impact to the wool industry that might be felt for not just a year or two but for another seven or eight more years," he said.

He said this downturn in the market could be the final straw for some wool growers thinking about moving out of the industry.

"What we felt with the price of wool over the last four years was we were winning a battle with the levels we were returning to growers," he said.

"With this correction, anyone that was in two minds about going to the meat side over Merinos would have their mind made up for them.

"When you look at the price of meat at the moment, how can you argue against those returns?"

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Mr Lamb said he thought Australia's wool market access was "very good" but the challenge was that the majority of it was going to one destination - China.

He said while Australia needed to spread its risk more, it "wasn't as simple as just selling wool to more countries".

"You hear comments from different industry bodies saying they'll go and increase how much wool they sell to India or Japan or wherever, but we're already trying to do that," he said.

"If those markets had room for more wool we'd already be trying to exploit that.

"It's just not there."

He said it came down to where the cheapest labour was and that was China.

"We need the rest of the world to compete on a labour cost basis, and until that happens, we're up against it," he said.

"And it's going to be a slow burn for the industry; it's not going to be solved in the next five years, it might not be in the next 10 years, but we certainly are in a better position now than we were 10 years ago."

Mr Lamb's comments come after WoolProducers Australia (WPA) released recommendations to the federal government on how it could support wool growers during and after the coronavirus crisis.

One of the long-term recovery measures WPA recommended the government pursue was prioritising free trade agreements (FTAs) in the EU and UK to ensure they enhanced market access for wool.

They also advocated that a FTA be explored between Australia and India.

But Mr Lamb said this wouldn't do much difference as not a lot of wool currently went to those countries.

"By all means, pursue them but at the moment, any work done in FTAs could be unraveled overnight by off the cuff political comments," he said.

He said one thing Australia could learn from our close neighbours New Zealand was how they focused on and promoted non-mulesed wool, as well as the traceability side of things.

"NZ has always been ahead of Australia in terms of animal welfare," he said.

"And we've suffered because of it; we've got clients that won't buy here but will go to NZ because they've got the right specifications."

He said while Australia would never be a country that was 100 per cent non-mulesed, "we certainly could be doing a better job".

"For starters we need more non-mulesed wool," he said.

"We need to market our story to particularly European customers better than we are at the moment.

"At the moment most of the talk in the industry is around how much wool is mulesed rather than the proportion that is non-mulesed."

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The story Improve labour costs to open up Australian wool market first appeared on Farm Online.

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