Changes in the Sheep Industry in the United States Making the Transition from Tradition (2008) / Chapter Skim
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5 The U.S. Wool Industry T he United States was the world's fifth largest wool‑producing nation in the 1940s.
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248 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES from feeder lambs. Lamb feeders in higher rainfall climates shear lambs to be feedlot finished, and also do so in regions with hot summer periods when the lambs enter the feedlots.
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THE U.S. WOOL INDUSTRY 249 mary reasons that Australian sheep producers historically have emphasized wool production and have become the dominant suppliers to world wool markets.
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250 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES Fiber Diameter All international wool markets describe fiber diameter in microns, with superfine wool as low as 14–17 microns up to coarser wool from 27–35 microns. Staple wools < 26 microns are generally used in the worsted system, with quality of fabric increasing in the lower micron ranges.
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THE U.S. WOOL INDUSTRY 251 Vegetable Matter Contaminants such as dirt and oils can be washed out of raw wool in the scouring process.
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252 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES TABLE 5-1 Percentage of Wool Prepared by Growers for Sale to Major Wool Warehouses Using One of the Three Major Preparation Methods, 2007 Wool Clip Market Preparation Method (%) Market OB BOU TSC Roswell Wool Co., Roswell, NM 5–7 60–65*
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THE U.S. WOOL INDUSTRY 253 and BOU wool sold through their warehouses is purchased by a major U.S.
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254 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES and in Kansas City, Missouri. Mid States also has assembly stations in several locations throughout the Midwest and the East for grower delivery to minimize freight costs for smaller clips.
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THE U.S. WOOL INDUSTRY 255 WOOL PROCESSING Once raw wool is purchased, several steps are required before it is processed into end products.
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256 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES fed into rollers for further combing, and then coiled into cans or bundles for delivery. • Top-finishing.
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THE U.S. WOOL INDUSTRY 257 on wool demand.
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258 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES 28.7 percent (USDA, 2006)
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THE U.S. WOOL INDUSTRY 259 MILL COTTON MILL FLAX SILK 5500 200 180 5000 160 4500 140 4000 120 100 3500 80 3000 60 95 96 97 98 99 00 01 02 03 04 05 95 96 97 98 99 00 01 02 03 04 05 MILL MMF MILL WOOL 11200 160 11000 140 10800 120 10600 100 10400 80 10200 60 10000 40 9800 20 95 96 97 98 99 00 01 02 03 04 05 95 96 97 98 99 00 01 02 03 04 05 FIGURE 5-2 Mill use of cotton, flax and silk, synthetic fibers, and wool, 1995–2005.
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260 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES countries to the United States and other industrial countries was subject to quotas under a special regime outside normal GATT rules. On January 1, 1995, the international textiles and clothing trade began a process of fundamental change under the ATC, as the industrial countries began eliminating their import quotas over a 10-year period that ended on January 1, 2005.
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THE U.S. WOOL INDUSTRY 261 Total Retail Demand, Thousand Tonnes 250 0.7 0.6 Domestic Per Capita Demand, Kg Domestic Mill Use, Net Imports, and 200 0.5 150 0.4 0.3 100 0.2 50 0.1 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Domestic Mill Use Net Imports Total Retail Demand Per Capita Demand FIGURE 5-3 U.S.
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262 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES increasing slightly in market share (Wilcox, 2007)
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TABLE 5-2 U.S. Raw Wool Exports (Thousands of Pounds)
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264 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES Raw wool imports to the United States have traditionally been larger than U.S. exports, making the country a net raw wool importer.
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TABLE 5-3 U.S. Raw Wool Imports (Thousands of Pounds)
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266 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES demand with respect to polyester price was found to be –0.13, somewhat lower than the estimate of –0.21 found by Capps and Williams (2006)
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THE U.S. WOOL INDUSTRY 267 come elasticities of the mill demand for cotton to be 0.803, 0.532 for wool, and 1.304 for chemical fibers.
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268 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES of the U.S. and Australian dollars, therefore, can have a major impact on world market prices and sales.
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THE U.S. WOOL INDUSTRY 269 to 15 percent lower than Australian prices at that time.
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270 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES Hedonic Wool Price Analysis Given the less than conclusive results of past research and the importance of the issue to the profitability of wool production, a hedonic price model was developed (Hager, 2003; Anderson et al., 2007) to test the hypothesis that skirting and classing wool generally produce higher prices compared to OB wool.
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THE U.S. WOOL INDUSTRY 271 TABLE 5-5 Number of Wool Lots Processed by Warehouses and Pools Surveyed by Region, Year, Level of Preparation, and Wool Types, January 1992 to January 2002 Number of Lots Processed % Region Western 1,555 18.1 Central 6,762 78.3 Eastern 281 3.3 Year 1990 1 0.0 1991 7 0.1 1992 5 0.1 1993 434 5.1 1994 426 5.0 1995 436 5.1 1996 408 4.8 1997 537 6.3 1998 657 7.7 1999 821 9.6 2000 1,630 19.0 2001 1,447 16.9 2002 1,768 20.6 Level of Preparation Original Bag (OB)
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272 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES Some of the original 8,589 observations were eliminated from further consideration in the analysis, including those for operations outside the Western, Central, and Eastern regions. Also, those corresponding to the years 1990, 1991, and 1992 were eliminated since data for those years were not available consistently across all respondents.
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THE U.S. WOOL INDUSTRY 273 FIGURE 5-4 Percentage difference in U.S.
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274 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES FIGURE 5-5 Percentage difference in U.S. clean wool price by year relative to the base year of 1997.
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THE U.S. WOOL INDUSTRY 275 FIGURE 5-7 Percentage difference in 5-07.eps Fig U.S.
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276 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES 40.0 23.5 22.0 20.0 15.4 5.7 4.0 0.0 PERCENT –20.0 –12.1 –25.2 –40.0 –34.2 –60.0 –49.4 –62.8 –80.0 Tender or Main Line Meat Breed Meet Breed Main Line Bellies Pieces Tags Locks Clothing Short Line Lamb Main Line Bellies 23.5 5.7 –25.2 –34.2 –49.4 –62.8 22.0 15.4 4.0 –12.1 WOOL DESCRIPTION FIGURE 5-8 Percentage difference in U.S. clean wool price by wool types relative to the base OB-wool breed.
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THE U.S. WOOL INDUSTRY 277 FIGURE 5-10 Relationship between U.S.
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278 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES FIGURE 5-11 Relationship between lot size as measured by grease weight and U.S. Fig 5-11.eps clean wool price based on the sample of 8,533 observations (1 lb = 0.4536 kg)
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THE U.S. WOOL INDUSTRY 279 calculating premiums and discounts available for wool of differing characteristics.
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280 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES to check-off funds from their incentive payments to be used to improve the production of lamb and wool and promote improved marketing of lamb and wool products to consumers. The authorization required that a sheep producer referendum be conducted that had to be approved by at least two-thirds of the sheep producers who owned at least two-thirds of the sheep in the United States.
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THE U.S. WOOL INDUSTRY 281 Act were in excess of $100 million.
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282 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES international marketing opportunities for U.S. wool.
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THE U.S. WOOL INDUSTRY 283 180 160 140 120 Cents per pound 100 80 60 40 20 0 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 FIGURE 5-12 U.S.
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284 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES Major Accomplishments of the U.S. Wool Industry • Increases in wool preparation to international standards.
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THE U.S. WOOL INDUSTRY 285 • International demand growth.
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286 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES ethnic lamb markets, specialty wools for hand spinners, yarn for weavers and knitters, and other wools such as naturally colored wools have a small but growing market. Emphasis in this market is on natural products with increasing interest in organically grown wools.
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THE U.S. WOOL INDUSTRY 287 enhanced promotion and training of sheep shearing and wool classing as occupations with financial support to trainees and producer hosts of training programs.
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288 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES production, and the decline in support for sheep research, education, and extension programs at the land‑grant universities and federal agencies. REFERENCES Anderson, D
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THE U.S. WOOL INDUSTRY 289 Lupton, C
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290 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES APPENDIX The Hedonic Wool Price Model The statistical model employed in the analysis is given by the following equation: log U.S. Clean Price it = α0 + α1January + α2February + α3March + α4April + α5May + α6June + α7July + α8August + α9October + α10November + α11December + α12YR1993 + α13YR1994 + α14YR1995 + α15YR1996 + α16YR1998 + α17YR1999 + α18YR2000 + α19YR2001 + α20YR2002 + α21WESTERN + α22EASTERN + α23log AFDit + α24log GWit + α25OU + α26TSC + α27WT MAINLINE + α28WTTENDERORSHORT LINE + α29WTBELLIES + α30WTPIECES + α31WTSTAINS + α32WTLOCKS + α33WTCLOTHING + α34WTMAINLINELAMB + α35WTMBMAINLINE + α36WTMBBELLIES + α37WTOBMBWHITEFACE + α38WTOBMBBLACK FACE + α39WTOBHAIRORCROSS BRED + α40WTOBWOOLBREEDLAMB + α41WTOBMEATBREEDLAMB + α42 WTOBBLACK + ei where the variables in the model include the following: January, February, etc.
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THE U.S. WOOL INDUSTRY 291 of the year when wool supply is less abundant.
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292 CHANGES IN THE SHEEP INDUSTRY IN THE UNITED STATES TABLE 5A-1 Estimated Coefficients and P-Values in the Hedonic Price Model Estimated Premium/Discount Coefficients Relative to Base P-value Month January –0.1913 –17.4 <0.001 February –0.0789 –7.6 <0.001 March –0.0608 –5.9 <0.001 April –0.0156 –1.5 0.212 May 0.0065 0.6 0.532 June 0.0779 8.1 <0.001 July 0.0039 0.5 0.756 August –0.0240 –2.4 0.081 September Base Base Base October –0.0624 –6.0 <0.001 November –0.1154 –10.9 <0.001 December –0.1267 –11.9 <0.001 Year 1993 –0.4947 –39.0 <0.001 1994 –0.1922 –17.5 <0.001 1995 0.1629 17.7 <0.001 1996 –0.1260 –11.8 <0.001 1997 Base Base Base 1998 –0.2702 –23.7 <0.001 1999 –0.7013 –50.4 <0.001 2000 –0.7379 –52.2 <0.001 2001 –0.6249 –46.5 <0.001 2002 –0.2921 –25.3 <0.001 Level of Original Bag Base Base Base Preparation Bellies Out Untied 0.0209 2.1 0.270 Table Skirted Classed 0.0811 8.4 <0.001 Region Central Base Base Base Western –0.1036 –9.8 <0.001 Eastern –0.0823 –7.9 <0.001 Wool Breed Main Line 0.2114 23.5 <0.001 (Wool Types Tender/Short Line 0.0551 5.7 0.013 from BOU Bellies –0.2903 –25.2 <0.001 and TSC) Pieces –0.4179 –34.2 <0.001 Stains –0.6808 –49.4 <0.001 Locks –0.9894 –62.8 <0.001 Clothing 0.1986 22.0 <0.001 Main Line Lamb 0.1432 15.4 <0.001 Meat Breed Main Line 0.0394 4.0 0.174 Bellies –0.1288 –12.1 0.545 Wool Types Wool Breed Base Base Base from OB Meat Breed (White Face)
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THE U.S. WOOL INDUSTRY 293 as from October to December were significantly lower from 5.9 percent to 17.4 percent than prices in September.
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