Tasmanian wool producers face decline in fine wool premiums

Tasmania has been home to the best-quality wool in the world. Merino sheep have been bred in Tasmania for over 180 years. It is also the sheep’s living conditions which are responsible for the top-quality wool. Tasmania provides the greatest possible diversity. But fine wool producers in Tasmania have been seeing a steady decline in premiums falling by 96 percent since 2001.

Surplus building on the market after years of a push to ‘get fine or get out’ have been the main reason of the declining returns for fine wool.
Returning to Tasmania after working as a wool export trader on the mainland, Rob Calvert says that the international market is pushing for a shift away from fine wool.

Medium wool is selling very well in comparison to fine wool. In the last 15 to 20 years there was a catch cry to ‘go fine or get out’.

The result of that is there has been a glut of fine wool, coupled with global fashions changing … led to less demand for fine wool when there is the greatest supply ever had.

Rabobank has looked at the decline in fine wool premiums as a ‘perfect storm’ of external factors leading to the loss of value in the industry.

The recent report suggests that the centralisation of wool processing in China, global insecurity as a result of the global financial crisis and a shrinking market for fine wool created an automatic decline in demand during the ‘go fine’ expansion.