South African wool growers have welcomed the slight increase in auction sales on the international markets over the past week.
The 1.1% increase in rand terms marks a small glimmer of hope for the distressed industry, says general manager of the National Wool Growers Association, Leon de Beer.
90% of South African wool is exported to China, Egypt, the Czech Republic, India and Italy, where it is processed for the textile market.
Before the coronavirus crisis hit the industry was already in distress, only just recovering from a previous ban brought about by foot and mouth disease (FMD) says de Beer.
The 2018/2019 financial year proved to be especially challenging for farmers, he says.
For the first time in forty years a cancellation in the sale of wool was in effect due to the FMD outbreak of January 2019 in parts of the Limpopo province.
This caused major disruptions in the sector, including the suspension of wool imports. The widespread occurrence of drought also affected the pockets of farmers severely.
The industry and farming communities were forced to brace for immediate impact, he says.
“This did not allow us to export wool to China. It took a while to recover last year until June when the Chinese authorities approved the export of wools under very stringent conditions of storage and regulated temperature control to make sure that any threat of the virus is destroyed.”
The result was decline of more than 30%, he adds. “The increase this week is an indication that we have reached the lowest point and we can really now only hope to see an upturn soon.”
Wool commodity production season begins in July and ends in June of the next year, De Beer explains.
“We have just started our new season and have already experienced some downfalls in wool prices, so we remain concerned. There are many factors at play, including droughts in the southern Western Cape and the Northern Cape province.”
The road to recovery following the FMD outbreak has been turbulent, he says. For the most part this is due to a forced hibernation period under the national lockdown.
While most agricultural activity was permitted under hard lockdown, high end commodities such as wine, flowers, mohair, and wool were the hardest hit under covid-19 regulations. The export of wool was only permitted in April following extensive dialogue amongst stakeholders.
“We are trying our best to recover, fortunately we can now auction and export our wools. We are hopeful, once the global economy is opened everything will fall back on track.”