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Wool Sale 2019/2020

04 February 2020

South Africa is the largest mohair-producing nation in the world, a title we can wear with pride in the Eastern Cape, knowing the role that Port Elizabeth plays in the ongoing auctions. But our wool industry is also huge, with Merino wool being our speciality. 

The two often get confused. Mohair comes from Angora goats exclusively, and wool comes from sheep. But the wool industry has seen a rather gruelling 2019. Can we see light at the end of the tunnel with the new year? Let’s have a look at how things have changed from the last wool sale season to now and what issues we are facing.

Wool Sale 2018/19 Season (1 July 2018 – 30 June 2019) 

Troubles for this season began when, for the first time in 40 years, we saw the cancellation of a wool sale. 

The cancellation of the two August auctions was a critical blow to wool farmers, who were already struggling owing to the drought. Many rely solely on these major auctions for their bigger annual pay checks, and they were left high and dry. 

January 2019 also saw a breakout of foot and mouth disease, which resulted in a temporary ban on wool exports to China, who account for approximately 71% of our wool exports. This opened up the conversation of diversification, with the Czech Republic, South Korea, Egypt, Thailand, Bulgaria, Japan, Germany, Turkey, Taiwan, Lithuania and Belgium (who collectively made 27% of the global imports in 2018) showing interest in the SA wool industry.

Wool Sale 2019/20 Season (1 July 2019 – 30 June 2020)

The 1st sale of the season sold only 81,8% of an already low 8 634 bales which were on offer. The sale closed at a value of R147,70 c/kg (Clean), as the Cape Wools All Wool Indicator closed with a decrease of 28,3%.

But as we near the halfway mark of the season, the new year has brought with it new hope as we have seen a steady increase since the 1st sale. 

The 15th sale of the season took place on 16 January 2020, where 95,3% of the 11 329 bales on offer were sold. The market closed at a value of R177,43 c/kg (Clean), with the Cape Wools All Wool Indicator increasing a further 0,5%. 

Thus far, the top 5 buyer spots have been dominated by Modiano SA, Standard Wool SA, Lempriere SA, Tianyu SA and Stucken & Co.
This bodes well for the economic growth of the Eastern Cape, despite the difficulties the agricultural industry has seen as a result of the drought and load shedding. But we are only halfway there.

Small Farmer vs Big Farmer

Going forward, something to consider which affects the wool industry – an industry which has a significant impact on the economic growth of the Eastern Cape – is the obstacles in the way of the wool farmer.

The more established, large-scale wool farmers are less likely to experience great difficulty in the shearing, transport and delivery processes involved with attending the auctions. 

However, there are a number of problems which the small-scale farmer faces:

  • Insufficient shearing and wool-sorting equipment
  • Lack of knowledge or training (with regard to sorting, classing, packing, marketing channels and marketing opportunities)
  • Lack of effective veld and herd management (including breeding programmes, breeding methods, access to good breeding stock, etc.)
  • Contamination of wool
  • Insufficient quantity (only complete bales of wool can be auctioned)
  • Bias from buyers
  • Lack of cooperation between other small-scale farmers
  • Lack of transport infrastructure and high transport costs

This is where brokers come in, serving as a middleman to make sure the wool from the small-scale farmers can still reach buyers. The farmer will need to first be informed of market-related prices, and additional brokerage fees may be charged. It is also important for the farmer to make sure they are not dealing with a dishonest broker who will dupe them. But a trustworthy broker can help the farmer with marketing, amongst various other things.

As we strive to eradicate obstacles like these, we can hope to see even better wool sales in the future, to complete the current season and for seasons to come.

Keep an eye on Cape Wools SA and BKB for updates and market reports as we go into the second half of the 2019/20 season.