24 Jul Wool Industry Revisits On Shore Processing as COVID-19 Highlights Reliance on China
Players in the domestic wool industry have renewed calls for the government to support the rebuilding of the Australian wool processing sector.
As current supply chains are affected by COVID-19 disruptions, wool growers are becoming increasingly concerned that a reliance on Asian processors poses a risk to the sector.
As well as consumers having an increasing interest in the provenance of their fibre, Trish Esson, a niche cashmere and wool processor from Victoria, said that having most wool processed in China could be an issue in the future.
“The word that we are hearing is that people are starting to take notice of where things are coming from,” she said.
“Wool growers have put all their eggs in one basket, [raw wool] predominantly goes to China.”
“If something goes wrong with the Chinese end, or they do like they have done – threaten to cut off buying stuff – then where do the Australians go? They need more markets.”
Despite the significance of the sheep industry in the initial development of the Australian economy, the domestic wool processing industry was offshored during the 20thcentury as rising energy and labour costs reduced profitability.
But according to one of the last remaining domestic wool processors, Michell Wool, those barriers have been reversed.
Advances in technology and automation have meant that processing wool in their Australian factory is now cheaper than their China site.
“We’ve put a lot of work into automation; we’re looking for that 1 per cent gain in everything we do, said David Michell.
“In China, it’s very much people first and machinery second, so I think it’s a whole different philosophy in how you run a factory.”
Mr Michell has also seen a positive impact from changing consumer preferences on demand for Australian-processed fibre.
“There’s been a trend in the last 10 years to move production back to Western countries to service Western markets, and I think that that will increase.”
Ag Minister Backs Potential for Onshore Processing
Victorian Agriculture Minister Jaclyn Symes has expressed her support for an Australian wool processing sector, saying that there were a raft of benefits for the industry and consumers.
“Not only as the coronavirus pandemic identified how important our agriculture sector is, it has again highlighted a desire for Australians to want to become more self-sufficient,: she said during a Rural Press Club of Victoria webinar earlier this month.
“As a government, particularly as the Minister for Regional Development, I am always interested in ideas and ways to create more country jobs, and if that is in the wool industry, I’m all ears.”
As a key supporter of onshore wool processing, The National Farmers’ Federation has called for the government to support sector development through by cofounding capital investments, providing tax offsets and by investing in research and development.
The NFF’s chief executive Tony Mahar said that technology was key in developing a sustainable wool processing sector.
“We need to have the food and fibre value-adding and processing here in this country,” he said.
“We have seen improvements in technology. Things are cheaper, things are more efficient to run.”
“It’s timely to have a look at it, so if it’s viable and we can get governments to commit to it, I think it will have a real beneficial impact in rural and regional Australia.”