Coronavirus: British Wool cuts payment amid severe recession

Sheep farmers will suffer at least two years of rock-bottom wool prices after British Wool confirmed a sharp drop in the value of last year’s clip and withdrew this year’s advance payment.

The co-operative, which sells wool on behalf of the vast majority of UK sheep farmers, said it was facing the most severe recession in its history.

It said the average price paid to producers for last year’s crop will be 32p/kg, almost half of the 60p/kg average price received for the 2018 clip.

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It normally issues an annual payment which is a split between a forward payment on wool to be delivered in the forthcoming year and a balance on what was delivered the previous year.

However, it is currently still holding 9,000 tonnes of wool produced in 2019, from a total of about 27,000 tonnes, after the coronavirus pandemic effectively ended the global wool trade in February.

In a statement British Wool said: “The hard fact is that the global cross-bred wool market will be extremely challenging for the foreseeable future. 

“In light of the huge and unprecedented valuation uncertainty in the market, and wishing to remain on a safe and sound financial footing, we will not be making an advance against 2020-21 clip wool and instead will make full payment for 2020-21 clips from May 2021 onwards, once we have sold the clip and have valuation certainty.”

British Wool chief executive Joe Farren said despite it being owned by farmers, the government had designated it a public sector body, which prevented it from accessing the coronavirus business interruption loan scheme available to privately owned firms.