Closure of the global wool market due to Covid-19 could significantly impact the finances of Britain’s leading wool board and see farmers receive lower prices for their fleeces, it has emerged.
The oversupply of wool and halt in trade since February has seen a ‘disappointing’ amount of last year’s clip unsold (7 million kg) with approximately 10m kg total left in British Wool’s hands.
It warned prices were likely to be ’severely impacted’ for the next 12-18 months due to the severe drop in demand for wool product coupled with the huge global overhang in cross-bred wool stocks from the 2019 season.
British Wool chief executive Joe Farren said the board would pay producers their balance for last season’s wool clip as normal, with the announcement of the payment level made at the end of May.
But Mr Farren revealed the extent of this payment will depend ’in part’ on British Wool being able to access the Government’s Coronavirus Business Interruption Loan Scheme (CBILS), made available to non-public sector bodies.
He added: “This will allow us to raise additional finance against the significantly larger than normal unsold element of 2019 season wool stock.”
National Sheep Association chief executive, Phil Stocker, said: “It seems likely the wool payment cheques for farmers will be extremely low this year if Government does not deem British Wool, a commercial business, eligible for the CBILS scheme.
“British Wool could lose a significant share in their market and be placed in a much weaker position, with suppliers turning to independents in future if they do not receive a reasonable return for their product this year.
“I am also concerned the knock on effect this will have on farmers’ confidence in wool.
"A lot of investment has gone in to raising the profile of this sustainable natural fibre and finding new markets and such a setback could be damaging for the industry, with wool valued even lower than it currently is now."
Mr Stocker urged the Treasury to support British Wool and help secure the future of the wool market.
Mr Farren added: "British Wool is in a sound financial position and is simply pressing the Government to allow it to participate in all the various schemes set up to help businesses through the coronavirus crisis so it can achieve the best outcome for its producers.”