The South African wool industry, which is currently suffering difficult times amidst the Covid-19 pandemic, can look forward to some positives as production in China slowly commence. Despite an overall feeling of optimism towards what 2021 holds for the wool industry, the end of the bumpy road might not be in sight just yet.
China, the main export destination of South African wool, was drastically affected by the Covid-19 pandemic. Although the Asian superpower has re-opened their chain of production, the level of production is still less than half its capacity in many Chinese wool mills. It goes without saying that this noticeably reduces the volume of wool bought by the country.
According to Mr. Guillau du Toit, chairman of the National Wool Growers Association, we should be thankful that it is the price of wool that is affected and not the product itself, “In the same way commodities such as oil and gold will always have a price because of their value, so will wool regain its value. Our challenge will be how to manage the external factors that influence production and marketing and how to overcome the financial loss in this critical economic phase of the world.”
Producers are encouraged to sell stocked-up wool if they have the chance rather than wait with the hope that they will receive better prices later in the year. The demand for wool is expected to stay low as consumers’ capacities for consumption is slowed down by the weak economy and the surplus of accumulated stock in the pipeline. Fortunately, the overall downtrend in production will soften the crisis.
Du Toit also notes that “governments decided to place human wellness ahead of the economy; we will have to realise that this will inevitably result in a slow and long process of recovery.” The wool industry contributes greatly to the South African economy and employs a sum of 39 000 farmworkers and sheep shearers. The value of SA clip is about R5 billion per annum.