Study Results from AWI
The Woolmark Company, contracted by the Australian Wool Innovation, conducted a global strategic market analysis and outlook for Australian wool.
Some interesting conclusions were:
Duty Reduction on Woolpacks Requested
During the January 2005 American Sheep Industry Association (ASI) Board of Directors meeting in Reno, Nev., the board approved a new nylon woolpack policy. The policy resolves that ASI seek a new classification to specify nylon bale covers for wool and that a duty suspension be made effective.
Nylon woolpacks, which reduce the chance of wool contamination, are widely used in the U.S. wool industry; however, they must be imported since there are no domestic suppliers. Currently, a 7-percent ad valorem duty (in proportion to the value) is assessed on the imported packs, increasing costs to the domestic wool industry by nearly $30,000 annually. Adding nylon woolpacks to the Harmonized Tariff Schedule of the United States would eliminate this additional cost.
In letters to Sen. Max Baucus (D-Mont.) and Rep. Wm. Thomas (R-Calif.), ASI requested their support to include woolpacks in the next Miscellaneous Trade Bill. Inclusion in this bill would provide a temporary reduction in the tariff on woolpacks.
?This tariff no longer provides any benefit to U.S. manufacturers and, in fact, the tariff increases costs and is a detriment to companies and American wool growers,? states Paul Frischknecht, ASI president.
Heavier Fleeces Take a Toll
According to CSIRO Livestock Industries and the Australian Sheep Industry Cooperative Research Centre, a significant link has been detected between one of the most desirable wool traits in Merino sheep and the animal?s ability to maintain body reserves.
The research has found there is a large difference between the fat content of sheep that produce high clean fleece weights (CFWs) compared to those that produce low CFWs but have the same live-weight.
Trials found sheep that grew 43 percent more wool had 20 percent less fat in their bodies compared to low CFW sheep. The high CFW sheep also lost weight 23 percent faster on poor-quality diets.
The findings have significant implications for other production characteristics, reproduction and for ensuring the animals? welfare. For example, a reduction in fat is known to have a negative influence on pregnancy and lambing rates, as well as the animal?s ability to withstand feed shortages.
This year, research will examine the affects the level of feed supply has on the correlation between CFW, body reserves and reproduction.
Australian Wool Groups Join Efforts
Australian Wool Innovation Limited (AWI) and Australian Wool Services Limited (AWS), which owns The Woolmark Co., have agreed to see if they can form an alliance to increase global demand for Australian Merino wool, reported the Wool Record Weekly on Feb. 24.
Both boards have given the go-ahead to review options to integrate research and marketing efforts. AWI will have an estimated A$420 million available to spend on research and development (R&D) over five years to 2009. Meanwhile, The Woolmark Co. struggles to pay its way.
Growers are becoming critical of the R&D focus and want more money to be used to increase Australian wool sales. AWI and AWS already work closely together, but it is clear the links between wool product research, development and innovation, and the marketing of wool products needs to be better integrated.
The merger reflects increasing concern in Australia and abroad that not enough is being done to market wool. The earliest any proposal could be presented to shareholders is late 2005.