Economics of Wool Production

Sheep Production Trends

Wool Production Trends

Graph taken from U.S. Dept. of Agriculture, National Agricultural Statistics Services, Sheep and Goats. http://www.usda.gov/nass/ For more information like this please check out this site.

Trends in Wool Prices

Marketing Agents

Producer: Wool is sold directly to buyers, independent coop warehouse, or mill reps on an individual offer and acceptance basis.
Wool Pools and Coops: The wool pools accumulate members' wool and sell and ship in quantity. They may take advantage of valu-adding opportunities. Clips are consigned to the pool and the sale committee determines when and how to sell the pool. They are the representatives of the individual growers.
Warehouses: The warehouses are the most important single type of marketing agency within the domestic wool marketing system. The sharp decline over the past 20 years in domestic production of grease wool has affected the location, number, and size of wool warehouses in operation. Warehouses purchase wool at four stages of marketing: prior to shearing, at "the farm gate", at the warehouse door, or at the warehouse after consignment.

Methods of Selling

Private Treaty: The method used when there is a single marketing agent and a single buyer. There is limited buyer competition.
Sealed Bid: This is a popular method of selling in wool pools. There are various buyer and buying firms. A letter is sent to buyers soliciting bids.
Auction: This method involves two or more buyers. They each have equal opportunity to bid on the wool. A minimum price is often listed below which bids will not be considered.
Descriptive Marketing: This is quickly becoming the preferred method of marketing wool in the U.S. This method uses objective measures of wool production to market and sell the wool.