Mulesing Market signals: Director Reflection

Simon Riddle, Director for WoolProducers Australia

There has been a lot of public media and comments made about this issue during the last 6 -months following the IWTO Congress in May, at which our biggest customer, China, expressed their strong preference for sourcing RWS accredited wool, revealing that South Africa is their preferred source, followed by New Zealand, with Australia coming in third. This is due mainly to both South Africa and New Zealand not mulesing and a higher proportion of their clips being accredited under schemes like Responsible Wool Standard (RWS), that provide assurances beyond just mulesing and animal welfare. South Africa has around 55% of its merino clip RWS accredited.

Where to start with this topic? Let me just start with the fact that neither WoolProducers Australia, or this article, is telling anyone whether they should or shouldn’t mules their sheep. This is an individual business decision that can only be made by the woolgrower. Mulesing is without doubt a topic that divides woolgrowers, and has largely been swept under the carpet and not dealt with appropriately for many decades.

What we need is clear and credible messaging to woolgrowers about what our downstream customers are saying about their wool sourcing requirements now and into the future, so that growers can decide what changes or investments they need to make within their business. We always hear about brands and fashion houses like Uniqlo, Hugo Boss, LVHM (e.g. Loro Piana) and Kering Group (e.g. Gucci) either sourcing certified non-mulesed (NM) , having clear dates to cease sourcing mulesed / non-certified wool or making commitments to transition to only certified NM wool. It’s great that these brands use wool, and long may it continue! However, we need to know what type of wool they will need in the future!

More and more of our customers and consumers are requesting articles made from wool sourced from non-mulesed sheep and they are wanting independent validation of these claims. With this, their procurement policies are leaning towards certification schemes such as the Australian Wool Sustainability Scheme (AWSS) and Responsible Wool Standards (RWS) to ensure that the wool that they use and market to customers is as claimed.

I have heard things like, “we will sell every kilogram of wool we grow, as we are the only country with enough volume to supply the market”. But the question is, with declining competition for our mulesed and uncertified wool, what will be paid for it in 10 years’ time?

“I will only consider going non-mulesed when there is a premium for it”. Everyone talks about the price premium for non-mulesed wool, but should we be more looking at the discount for mulesed wool? I think that we need to get away from this thinking of “price premium”, in any case it’s a price difference. Prices are driven up by competition and come down when the competition drops. Would our perspective change if we thought of it as a mulesing discount?

While there are variable discounts for mulesed wool, all other factors being equal, there is a higher price paid through the auction system for certified non-mulesed wool. What is not reported as openly is the prices achieved for wool that does not pass through the auction system. Accredited wool sold by contract or private treaty is virtually not reported on at all. From my own experience I can tell you that this certified NM premium can be significantly higher than the auctions.

Another statement I have heard too many times is, “China will buy our wool, they are not worried about mulesing”. It is true that about 85% of our wool goes to China, with around 50% of that being consumed at retail in China. But the other 50% goes to a third or fourth country for further processing or retain sales, in many of these countries certified NM wool is the preference. Mulesed wool will still sell, however it does not have the same level of market access (and therefore the increased competition) that non-mulesed wool has.

While there are commercial sourcing preferences, we are also seeing the emergence of regulatory barriers that may impede market access in the future. For example, Switzerland has recently mandated pain relief for castration and tail docking and passed a law to ban tail docking by 2040. In no way am I saying we need to copy this move, but surely if we are continuing to mules and defend the practice, then simple refinements to undertake it according to best practice, i.e. administering pain relief has to be a minimum?

As an industry we cannot simply rest on our laurels, we need to shift with the times and continue to improve what we do. As I mentioned earlier, this is not an article to tell you what to do on your farm, but to make the best decision on what you do on your farm you need to be aware of what our consumers and markets are telling us. We need to keep leading the way and innovating, not simply being content with what we have managed in the past, otherwise we will be quickly overtaken.

Wool is a wonderful fibre and great for the environment, but we need to ensure that our Australian wool remains relevant to our consumer, as they buy the finished products, and they can and will quite easily find alternative fibres to replace it! We need to actively consider how Australian wool is perceived by our consumers (and buyers) to ensure that we maximise market access, competition and ultimately the prices that we receive

Simon Riddle,

Director WoolProducers Australia