3 February 2017

Ewe beauty! Record wool price has farmers riding high on the sheep's back

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By Darren Gray - The Age

The stopwatch shows that it was all over in less than 65 seconds.

So as auctions go this sale, held in a sprawling warehouse in the western suburbs of Melbourne, was a rather quick one.

But for the farming family looking through the glass into the wool auction room, two of whom had travelled hundreds of kilometres to be there, it was 65 seconds well spent.

Greg Koschitzke and son Jarod watched intently as the bids for 36 bales of the family's fleece wool climbed and climbed, as Elders auctioneer Rex Bennett called the auction at a speed that would impress any seasoned Melbourne Cup caller.

One lot of the family's wool, which sold under the hammer for $12.49 a kilogram inside 16 seconds, brought about 34 per cent more than similar quality wool the Koschitzkes sold a year ago.

For 59-year-old Greg Koschitzke, the spike in prices was good justification for attending a wool sale for just the second time in about a dozen years.

During the years of the drought and low wool prices, there always seemed to be plenty of reasons to stay at home on the farm at Brocklesby in southern NSW, just over the Victorian border, and keep working.

But today, much to the joy of wool growers across the country, Australian wool prices – particularly for fine wool – are enjoying a renaissance, surging to an all-time high last month.

The new record was set when the Australian Wool Exchange's "Eastern Market Indicator" or EMI, an index measuring wool prices, hit $14.39 a kilogram.

After Thursday's sales in Melbourne and Sydney it closed at $14.22 a kilogram.

Comparing notes over lunch during a break in the auction, Greg and Jarod observed that the prices they were paid exceeded expectations, in one case by almost 60 cents a kilogram.

"It's fantastic," Jarod said of the results.

"But it's like any commodity. There are peaks and troughs throughout the whole year, throughout periods of two, three, five years.

"You take your money and run while you can, because you know that there'll be a time where it's going to be a depressed market and you're scratching for every cent."

After a few years living in Melbourne and overseas, it seems Jarod, 32, chose the right time to return to the family farm.

"Agriculture has got [a good future], whether it be in growing crops or [running] livestock, the next 10 years will be pretty prosperous I would have thought.

"And that makes you rest a lot easier, knowing that you've got two or three different enterprises," he said.

His father welcomed the higher prices.

"It's pretty exciting times," Greg said. "[But] we need to get those sort of returns for the inputs we put into it," he said.

"When you look at all your costs of production, even down to your fertilisers and pasture seed – all your costs seem to rise year by year.

"When you have a bit of a dip in the wool market the margin's not there.

"Now they're putting a little bit of margin in it and we hope it will be maintained at a reasonable level," he said.

Wool buyer Chris Kelly, managing director of Australian Merino Exports, said strong prices built confidence.

"It's fantastic, it's great to see," he said.

A key driver of the price surge had been strong demand in recent months from overseas customers for fine wool.

"Six months ago there was a subtle change in requirements by the customer overseas.

"Fashion changes very quickly, and they wanted a lighter, softer garment that can be worn closer to the skin, so totally different to what the demand had been in the last three or four years," he said.

When the Melbourne wool auctions wrapped up on Thursday, 9331 bales of wool had been sold for a total of $13.78 million.

Wool growers Jarod Koschitzke and his father Greg Koschitzke
Competitive, Proven, Trusted
Greasy Wool Greasy Wool Greasy Wool