Turmoil.
That one word best describes the state of the international wool market and Canada’s position within it.
So says David Mastine, president of Canadian Co-operative Wool Growers, the central clearinghouse for collecting, grading and marketing of 1,360-tonnes of raw wool a year from across the country for domestic and foreign markets.
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Attributable in part to COVID-19, the wool trade has been tough. Prices have dropped 65 per cent since 2018, with wool’s trading price on the benchmark Australian commodities index now sitting at the same level as a decade ago.
The co-op’s general manager Eric Bjergso calls it the deepest slump ever experienced in the industry. While demand for fine wool has increased, demand for broader wool has not. There’s a surplus of coarser types in every wool-producing country in the world.
“It seems that clothing demand in a global pandemic isn’t a high priority,” Bjergso observes. “Many shops are still closed worldwide.”
A visit with Bjergso reveals a warehouse with about 50 percent more stored, unsold wool than usual for this time of year. He says producers with adequate on-farm storage have been asked to hang on to their bundles until conditions improve.
However, wool is still being accepted and graded in Carleton Place.
Payments to producers are being processed. The co-op employs 50 staff, about half in Carleton Place, and no layoffs have been necessary during the downturn.
Under co-op guidelines, no matter the size of the submitted wool bundle, members are paid the same price for the same grade (fine, medium, coarse) rated according to fibre diameter and length, yield, colour, and presence of foreign matter, minus fees for operating the service.
The price to producers is adjusted quarterly to reflect global market conditions.
The pandemic hasn’t been the industry’s only challenge.
The market’s stagnation dates back to the China/U.S. trade dispute that’s run for almost a decade. That crisis forced the Canadian co-op to look at ways to diversify into new markets, with 90 per cent of its raw product exported to China, the U.S., India, Czech Republic, Egypt, Bulgaria and Uruguay.
The market is truly global, with Canada accounting for just a fraction of the almost 400-million tonnes of production each year.
As it waits for the industry to rebound, the co-op is pursuing research funding for developing new technologies which will permit scouring and processing raw wool in Canada. It’s also conducting a feasibility study on potential new products and markets.
Farmer-owned and established in 1918, the co-op occupies a large stone structure in Carleton Place, originally built as a Canadian Pacific Railway roundhouse and machine shops. The 103-year-old national network also operates several outlets for farm supplies and wool clothing.
Its Carleton Place headquarters contains the cozy, colourful Real Wool Shop and Livestock Supplies & Equestrian Centre, which contribute substantially to the CCWG bottom line, which, in good times, includes $12 million in sales.
