Q&A with Joe Farren, CEO, British Wool.
Q: Is British Wool a profit making organisation?
A: Not in the traditional sense. Our profits are the returns we give to the 40,000 producers who send their wool to us. As a farming co-operative, we are owned by our producers – the returns we provide for our members recognise the true market value of the wool.
Q: How has competition changed over the past few years?
A: There has been a distinct change in competitive dynamics over the past four-five years. The ‘direct from farm’ Irish competition is now owned by the two largest downstream processors in the UK who actually buy from our auctions at Bradford. Their aim is to maximise profits through driving wool prices down in the long run and increasing their market share at our auctions.
Q: What would happen to wool prices if British Wool weren’t there?
A: Put simply, prices would plummet. If you look at the example of the Republic of Ireland, it does not have a British Wool alternative and the same direct from farm buyers who operate in the UK dominate the market. Prices there are typically 50% lower than those we return to our producers. Such a severe drop in wool prices in the UK would inevitably see the rates paid to shearing contractors come under pressure and drop significantly as a result. In addition, British Wool is the only company in the UK which will take any type of wool, therefore a significant number of producers would struggle to even find a buyer for their wool. This means more wool disposed of at landfill as it would be considered a waste product under existing environmental legislation.
Q: How can British Wool give better returns to producers for their wool?
A: The competition use our prices as a barometer and price at substantial discounts. Our aim is to maximise the value of our producer’s wool whereas the competition want to pay as low a price as possible to enhance their own profits. This is why British Wool have and will continue to offer consistently better returns than the competition. This price premium will increase over the coming years as our consumer marketing strategy matures and we increase our Chinese customer base through our Shanghai Office.