Sheep producers are unlikely to cover the costs of shearing when selling wool this season as prices have collapsed in the wake of the Covid-19 crisis.
British Wool – a marketing body owned by 40,000 farmers across the UK – says the average price for the 2019-20 clip will be 32p per kg. This is down from 60p per kg in the last two years.
In a statement, British Wool said the reduced price was a result of having around nine million kg of unsold wool left from the 2019-20 clip, which totalled 27m kg.
It said it had been unable to find a home for the wool due to the closure of the global market for cross-bred wool, which has been shut since February, and it had been forced to place a value on the unsold stock at a significant discount to the last prices sold.
“If we sell the 2019-20 unsold stock at a higher price than our assumed value we will make a further payment later this year in relation to the 2019-20 clip, depending on the economic outlook at the time,” said British Wool.
It also confirmed it will not be making an advance payment for 2020-21 clips and it will instead make a full payment for the clips in May next year.
“Should the market happen to improve somewhat in the next 12 months from the trough it is in at the moment, the price returned to you would see the benefit of this improvement,” said British Wool.
“We are asking producers to support us through this very difficult season by bringing their wool into us so that we can preserve the volume use of British wool downstream, further develop our new British wool rich product ranges and emerge from the Covid-19 slump ready to exploit a strengthening market.”
National Sheep Association chief executive, Phil Stocker, said the reduced price for the 2019-20 clip would affect cash flows on farms.
He added: “A fall of 50% of total value would, for most, mean total income not clearing costs.”