Wool markets starting to show signs of recovery

The impact of the Covid-19 pandemic on Ulster Wool has been well documented with the business going through the most challenging 12 months in its history.

The closure of large parts of the economy as Covid restrictions took hold severely impacted global demand and resulted in significant over supply through much of 2020.

When the first Covid lockdown was imposed, the wool scouring plants in the UK closed and manufacturers stopped processing. Exports were also put on hold. Ulster Wool faced a situation where, in effect, there was no market for the product and as a result, the 2019 season closed with 11m kg of stock unsold in the UK.

Ulster Wool needed to adapt and were proactive in moving the auctions online and the stock overhang from 2019 has been successfully cleared and as the market starts to recover, will also close the 2020 clip year with a minimal stock position.

Since February, auction prices have also started to recover. The average auction price is now around 67p per kilo compared to 50p – 55p for most of the last 12 months.

Andrew Hogley, CEO said: “Given the challenging year we have had, Ulster Wool is unable to make any additional payments on some grades of Fine and Medium wool where we made an upfront payment at the start of the 2020 season.

“Mule and Blackface producers will however receive a balance payment for the wool they delivered last season. A healthier stock position, reduced cost base and recovering auction prices put Ulster Wool in a much stronger position to deliver better value for our producers in 2021. All payments this coming season will be made in arrears.

“Also, in order to support our service offering we are abolishing onward carriage fees at all of our collection sites from this season. Ulster Wool’s shearing courses are also resuming this year. We see this as an essential part of the support we provide for the industry.”

Brendan Kelly, Ulster Wool Chairman commented: “Ulster Wool is a cooperative and we firmly believe that the collaborative marketing of the Northern Ireland wool clip is the best way to deliver value for wool producers.

“Over the last year we have lobbied extensively for support for the wool industry with our partners in the UFU and NSA.

“At the start of April DAERA announced a support package for wool producers - this was based on the evidence Ulster Wool provided to the Minister that demonstrated the impact of Covid on wool prices.

“In 2020 we handled less wool due to a small number of producers not seeing value in delivering their wool. This in turn had a negative impact on our operating cost per kilo. The more wool we handle the more cost effective our operations become which in turn allows us to return more value to all producers.”

He continued: “Every kilo of wool Ulster Wool handles makes an important contribution to supporting your organisation ensuring we can continue to provide a high standard of service to all producers, drive demand with downstream manufacturers, work with universities and industry on new product development and finally, continue to represent your best interests as wool producers.

“I’d encourage all producers to support Ulster Wool and for those who have wool from 2020 still on the farm, to deliver this into Ulster Wool this season.”