The Effect of Low Staple Strength on Farm Wool Profitability

Fiona Frawley and Bill Malcolm

No 234188, Papers from University of Melbourne, Melbourne School of Land and Environment

Abstract: Australia produces 98% of the world’s fine wool. Fine wool attracts price premiums at auction. Fine wool can be much more susceptible to breakage as a result of low staple strength or ‘tender’ wool. Tender wool receives discounts that can range from 3% to up to 30%. This can greatly impact on farm wool income. To evaluate the management strategies for overcoming poor staple strength, producers need to determine whether staple strength is a problem in their wool clip, and the cost to their business in forgone income as a result of strength discounts. This study explored whether wool of poor staple strength is a problem in South West Victoria. Based on a Case Study and on industry data it was found that wool with poor staple strength can comprise almost a third of wool sold. The severity of price discounts for tender wool changes from year to year. In years of high wool prices, and high discounts and premiums, staple strength was a key contributor to profit. In these years, profit from wool of sound strength almost doubled the profit from tender wool. In years where the wool price and discounts were low, the difference in operating profit was very marginal, with staple strength having little effect on final profits. Managing to avoid or reduce tender wool in reproducing ewes cost $3.29 per ewe to improve staple strength by 5 N/ktex. There were increases in income of $8.98 per ewe in 2001-02 and $7.09 in 2002-03 but management costs outweighed the income benefits in years of lower wool prices.

Keywords: Livestock; Production/Industries (search for similar items in EconPapers)
Pages: 38
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:ags:auagpe:234188

DOI: 10.22004/ag.econ.234188

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