January 14, 2005 -- The cost of purchasing nylon packs may be increasing. Producers may be paying from $2 to $2.50 more per pack during this year?s shearing season, according to the wool pack industry.
This increase in cost is a result of a number of things. Wool packs are produced utilizing petroleum yarns. Unfortunately, petroleum products have experienced a cost increase of approximately 40 percent.
Secondly, competition has decreased. In the past, there were up to 14 different companies manufacturing nylon packs. Today, only three still produce the product. Also, the exchange rate between the United States and Australia and New Zealand has changed substantially. Currently, the U.S. dollar is worth at least 30 percent less in Australia and New Zealand than it was just a couple years ago.
Historically, the United States has attempted to purchase packs for producers at times when the prices were thought to be at their lowest level. This typically meant that packs were bought after the peak shearing season in Australia and New Zealand. This year, however, post-wool season prices are higher than they were in the fall of last year. Producers in the United States have enjoyed the lowest pack prices available for the last four years. Although any increase in expenses is discouraging, the rise in costs per pack will equate to less than one-half cent per pound of wool.
The American Sheep Industry Association has approved a policy to seek a temporary reduction in the tariff applied to imported packs to help reduce costs to U.S. producers. This action will be a topic at the upcoming sheep industry convention at the end of January.
Staff contact: Rita Kourlis Samuelson