Less Demand For Wool

Demand for wool has declined throughout the years which has impacted its production. A dramatic decline in the price of wool also played a role in driving farmers from the industry. “In late 1966, the commodity price of wool dropped a startling 40 percent. Since then, the price has generally continued to trend downward. As farmers found it increasingly difficult to profitably produce and sell their wool, they began switching to other agricultural pursuits, such as raising sheep for meat. In the early 1900s, selling wool was the most profitable way for a farmer to make a living from a sheep operation”, (THE INDUSTRY, n.d.) . Today, many farmers are finding meat and dairy operations to be substantially more profitable than the Wool Industry.

The graph on the left shows The Global Merino Production of Australia, South Africa and New Zealand. By seeing the graph you can identify that New Zealand Produces less Greasy Tonnes of Wool and less Micron of Wool Compared to the other two countries.

“As sheep numbers have declined, so has wool production. New Zealand’s annual wool production now totals 126,000 clean tonnes, which is down 45 percent since 1990-91.Over this time the yield per head is little changed at 4 kilograms: productivity enhancements have been flat, with the attention on meat production as opposed to wool production”, (ANZ Research, 2013).

With decline in wool prices and a rise in lamb prices there has been a bigger emphasis on meat production over the last 25 years. This means that farmers are opting for sheep that can produce more meat as opposed to more wool because there is more demand for sheep that produce more meat. According to a Beef and Lamb chief economist Andrew Burtt, “a continued decline in sheep numbers was influenced by a strong demand for mutton from China and a relentless increase in dairy farming”, (The Guardian, 2015).

Currently New Zealand's wool industry contributes less than 2% of the international export returns (Faulkner, 2012). As dairy and meat industries become the highest profit receivers, they have quickly become the most popular agricultural activities and many wool farmers have changed to these industries. Due to the production of synthetic fibres, wool is no longer a necessity and is the less popular option of the two, as synthetics are cheaper to manufacture. In recent years, synthetic fibres hold many similar characteristics to wool and so wools unique qualities are no longer appreciated. A main cause in the fall of the industry is "unmotivated supply chains selling to consumers with outdated perceptions of products" (Faulkner, 2012, p. 13). This means that industries are selling the same products that lack innovation and therefore customers have lost interest in the material.

Beef and lamb are still New Zealand’s second highest export, while wool is number fourteen after pearls, precious stones and metals. The red meat industry is one of New Zealand’s major export earners which earn an export revenue of more than $NZ6 billion annually. “The production and export of beef, lamb and venison is, and will continue to be, a core part of New Zealand’s economy”, (The Meat Industry Association (MIA), Meat & Wool New Zealand (M&WNZ) and Deer Industry New Zealand, 2009).

Reasons for an increase in demand for red meat:

1) The increase in demand for red meat is because customers appreciate its attributes and quality.

2) Sheep, cattle and deer are raised on NZ’s natural grass-fed systems therefore they have sufficient levels of Omega-3 oils, which are good for health.

3) Efficient farming methods and processing expertise low fat, tender and delicious meat.

4) New Zealand meat is ordered world-wide because of the processing hygiene and packing technology that guarantees safe food.

5) Vacuum-packed chilled meat has a shelf life of up to 14 weeks. During this time, enzymes in the meat continue the ageing process, meaning it is more tender when it arrives in major markets.

6) New Zealand livestock is free from BSE, foot and mouth and other major livestock diseases, due to geographic isolation, effective border control and a pasture-based diet.

7) New Zealand’s pasture-based ‘free range’ farming appeals to customers, who are becoming increasingly concerned about animal welfare and environmental issues.

Prediction

According to the research I have done, I am predicting that the NZ Wool Industry is not going to be able to sustain itself in the year 2070. This is because during research I found that a main cause in the fall of the industry is "unmotivated supply chains selling to consumers with outdated perceptions of products" (Faulkner, 2012, p. 13). The products that the Wool Industry of New Zealand is lacking innovation which is resulting the customers to lose interest in the material.

References:

ANZ Research. (2013, April). Retrieved from https://www.anz.co.nz/resources/9/6/962134b2-8e3a-4056-a872-39197991a95c/ANZ-AgriFocus-20130403.pdf?MOD=AJPERES

The Guardian. (2015, January 7). Retrieved from http://www.theguardian.com/world/2015/jan/07/new-zealand-sheep-numbers-fall-to-their-lowest-for-75-years

THE INDUSTRY. (n.d.). Retrieved from http://www.nzmerino.co.nz/casestudy/industry.php

The Meat Industry Association (MIA), Meat & Wool New Zealand (M&WNZ) and Deer Industry New Zealand. (2009). MEAT IN FOCUS. Retrieved from www.mia.co.nz: http://www.mia.co.nz/docs/Meat%20Industry%20profile%20-%20Final%20version%20-%20November%202009.pdf

Image 1: http://fitnessheat.com/lamb-meat/

Image 2: http://www.theland.com.au/news/agriculture/sheep/wool/meat-demand-clips-wool-forecast/2741298.aspx

Image3: http://www.peta.org/issues/animals-used-for-clothing/wool-industry/wool-environmental-hazards/

Faulkner, S. (2012). Hello New Zealand Wool- This is the Future Speaking.

Retrieved from http://www.nuffield.org.nz/uploads/media/2012-Sandra-Faulkner.pdf

Ministry of Culture and Heritage. (2014). NZ's first sheep released.

Retrieved from http://www.nzhistory.net.nz/first-sheep-released-in-new-zealand

Stringleman, H. (2015). Sheepfarming- Importance of the sheep Industry.

Retrieved from http://www.teara.govt.nz/en/sheep-farming/page-1

Figure 1. THE INDUSTRY. (n.d.). Retrieved from http://www.nzmerino.co.nz/casestudy/industry.php

Figure 2. Beef+Lamb New Zealand Economic Service, Statistics New Zealand

Figure 3. Statistics New Zealand. (2012). Historical wool export [Digital visualization].

Retrieved from http://www.stats.govt.nz/browse_for_stats/economic_indicators/prices_indexes/historical-wool-export- prices-volumes-2011.asp

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