South Africa’s wool industry has been at a complete standstill for nearly four months and has lost about R734.15 million in revenue. This is due to China’s ban on wool imports from South Africa because of foot-and-mouth disease (FMD) in the country. Experts warn that, if the ban is not lifted soon, it could spell disaster for Mzansi’s wool producers.
“If the ban from China is not resolved, it will have a devastating impact on communal producers, as most of their wool is exported to China,” says the general manage of the National Wool Growers Association, Leon de Beer.
Because China is South Africa’s primary wool export market, accounting for roughly 70% of exports in value terms, industry experts have flagged this as a massive problem that could lead to widespread job losses.
While Mzansi has other wool markets that include the Czech Republic, Italy, India, Bulgaria, Germany, the United States, Malaysia, Japan and Mexico, these are relatively small, and cannot offset the losses resulting from China’s restrictions.
“South Africa, like Australia, is heavily dependent on China to process wool because that is currently how the world has developed with the processing capacity,” De Beer says.
“It is not good for South Africa, nor any other country, due to the risk we are now experiencing. There are alternative markets like in India, Europe and Egypt, but limited in volume.”
Loss of income
A wool farmer in the Eastern Cape, Eben du Plessis, says that the ban also brought wool auctions to a halt. As a sheep farmer, Du Plessis is heavily dependent on auctions and he has already suffered losses.
He has managed to avoid retrenching any staff members to date, but is actively looking for other income streams. “We are very fortunate to have a very proactive organisation in the wool industry. I am very confident that they are doing everything in their power to make sure that we as producers can sell our products.”
De Beer says the long-term solution is for South Africa to develop its own capacity to process wool locally. He acknowledges that the industry is pursuing the idea, but he also knows that it will not happen overnight.
Hopes on industry leaders
According to Wandile Sihlobo, chief economist at Agbiz, South Africa needs to forge a unique relationship with China specifically on wool trade, which could insulate the industry at such critical times.
Such strategic interventions can only occur at the political level, he says, and adds, “Without access to the Chinese market, the wool industry is likely to be under strain for some time.
“At a national level, this will also show in export earnings. Wool was the eighth most significant agricultural exportable product in 2021, accounting for 3% or $326 million of South Africa’s exports of $12.4 billion.”
The present-day ban arrives at an even more economically challenging time with farming input prices for all agricultural industries rising, Sihlobo notes.
For the livestock sub-sector and wool industry, animal feed prices and all logistics costs are adding to the cost pressures which farmers need to bear. There are also household financial pressures for small- and medium-scale farmers that rely on the proceeds of this industry to sustain their families.
Du Plessis says wool farmers in the Eastern Cape are looking at their provincial and national wool growers’ association to protect their interests as members.
“We are very fortunate to have leaders in those organisations who will lead the fight together with organised agriculture, ensuring that the wool farmer can keep on producing.”
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