China has made the wool business more profitable. Next step: Make it sexy.
Amid all the teeth-gnashing about the Chinese purchase of the Crafar farms, it may help to remember that without the Chinese, another of our agricultural industries would most certainly be down the gurgler.
The wool industry, which has been mired in an over-supply/under-demand quagmire for many years, has finally turned a corner, according to a recent missive from agri-bankers Rabobank.
While it is true that Kiwi farmers have been leaving sheep farming in droves because of the uncertain outlook, and supply has subsequently plummeted, the reality is that demand is up. Almost half of whatever wool New Zealand exports is going to China, and within a year the Middle Kingdom will be taking most of it.
China is the world's largest wool processing centre, but can't produce enough domestically to satisfy demand. The wool grown in China tends to be coarser than the stuff from Australia and New Zealand, meaning the domestically-grown product gets channelled into mats and carpets, while the finer clip coming from the average New Zealand ruminant is used for the high-end apparel side of the market.