As the shearing season gets underway, British Wool has published details of producer payments and confirmed that all producers who delivered wool to a grading depot or intermediate depot in 2020 will receive a payment.
The impact of the Covid-19 pandemic on British 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. British Wool faced a situation where, in effect, there was no market for the product and as a result, closed the 2019 season with 11 million kg of stock unsold.
British Wool needed to adapt and moved the auctions online and in January 2021, announced a restructuring of the grading depot network.
On an underlying basis the savings equate to a reduction in handling costs of 7p/kg which will translate into additional value for producers over the medium to long-term.
Market recovery
As the new shearing season begins, British Wool’s stock overhang from 2019 has been successfully cleared and as the market starts to recover, British Wool 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/kg compared to 50p – 55p for most of the last 12 months.
Andrew Hogley, CEO of British Wool said:
“Despite the challenging year we have had, British Wool is still making a payment to producers for their 2020 clip. The total return averages 15p/kg.
This is still a long way below where we need it to be but we are optimistic that we will see a further price recovery through the course of the next year.
“A healthier stock position, reduced cost base and recovering auction prices puts British Wool in much stronger position to deliver better value for our producers in 2021,” he continued.
“Also, following the completion of the restructure, we have enhanced our service offer by opening a number of new collection sites this season.
In order to support our service offering we are abolishing onward carriage fees at all of our collection sites from this season.
“British Wool’s shearing courses are also resuming this year. We see this as an essential part of the support we provide for the industry,” he concluded.
