Wool was New Zealand’s main export earner from the 1850s until the start of the 20th century, and produced almost 90% of total export income in 1860. Since then wool has fallen in importance – in 2006 it made up 2.73% of New Zealand exports, with a value of $839 million. However, New Zealand remains the world’s second largest exporter of wool, with 20% of the world’s exports by volume, after Australia (52%).
Wool products
The specific use of wool depends on the fineness of the fibre. Coarse wool is used in the interior textile industry and fine wool in the apparel industry. In 2006 New Zealand’s wool exports were, by volume, 5% fine wool, 15% medium, 33% fine crossbred and 47% coarse crossbred.
About 68% of New Zealand’s wool production is used in the manufacture of interior textiles:
- machine-made carpet (50%)
- hand-made carpet (11%)
- bedding (4%)
- upholstery (3%).
The remaining 30% is used for apparel:
- machine-knitting yarn (17%)
- hand-knitting yarn (7%)
- woven apparel (6%).
Export markets
In the early 2000s New Zealand exported wool to over 50 different countries. The top export markets by volume were:
- China (25%)
- United Kingdom (13%)
- India (10%)
- Italy (9%)
- Belgium (8%).
There were around 25 active wool exporters in New Zealand, with the five largest handling around 80% of exports. About 45% of New Zealand’s wool was sold directly to private buyers and end users. Farmers were also developing relationships with processors so they could adjust wool production to better meet the requirements of the processors.
Simply the best
Italian textile company Loro Piana is the single biggest buyer of the world’s finest wools. It buys large quantities of Merino wool from New Zealand farmers to produce Zelander fabrics. Each year the company runs the Loro Piana World Wool Record Challenge to find the world’s finest bales. In 2006 it paid $1,000 per kilogram for two bales of 12-micron New Zealand wool.
Competitive advantage
A key competitive advantage for wool exporters is that all wool sold at auction in New Zealand is tested at an accredited testing facility, which measures commercially important features, so wool can be supplied to meet buyer specifications. The characteristics tested include yield, condition (moisture content), fibre diameter, colour, length, strength, and bulk. Many manufacturers are beginning to demand that chemical residues are also measured, as customers become more conscious of environmental and health issues.