This is good news for the meeting’s host country Argentina. Its wool production is slowly recovering from a record low, as higher prices lure farmers back to the business at a time when sustainability poses a challenge for growth in global sales of natural fibres.
“To get into the cattle business, it takes about three years to turn around your money,” Miguel O’Byrne, president of the Santa Cruz Province Farmers Federation (FIAS), told WTiN. “With sheep, you can be in and out of the business in one year.”
As in the rest of the world, the Argentine wool industry is seeking to make its farming and processing practices more sustainable, helping to take advantage of higher prices for wool, buoyed by low production and strong demand for the fibre.
Argentina may just benefit after years of sagging output. In his talk, O’Byrne said that sheep stocks in the South American country are on the rise after falling from a peak of 73 million to a low of 12 million in 2002. According to his estimates, stocks should grow 1% per year to reach 18 million in 2030, up from 15 million this year.
Much of the growth, he said, should come from northern Patagonia and the heartland Pampas region, where lands are more fertile than in the dry southernmost provinces of Chubut, Santa Cruz and Tierra del Fuego, home to most of the country’s sheep.
While cattle and crops are less labour-intensive than sheep, O’Byrne said more farmers are betting on lamb and wool for the quick turnaround and stable profit margins.
“Even if sheep farming is more work, it is a great opportunity. People are realising this,” he said. “Wool production and quality could increase significantly.”
The growth of stocks and productivity gains, led by improved technology and practices, should increase lamb production by 4% per year to 90,000 tonnes by 2030, up from 55,000 tonnes currently, boosting exports, O’Byrne said.
Indeed, while wool production has dwindled to 43 million kilos from 61 million in 2003, the industry is still investing.
There are challenges for increasing exports from Argentina, however. One is the sheer difficulty of doing business in Argentina, where this year the economy is shrinking, inflation is touching 40% and interest rates are sky-high at around 70%. The Argentina peso lost half of its value against the US dollar this year.
And Argentina and Uruguay’s sheep farmers had hoped for a free-trade agreement to be forged soon between the EU and Mercosur, a trade bloc that also includes Brazil and Paraguay as members. That would eliminate a 2% duty on Mercosur wool exports to the EU. But at a summit meeting of the Group of 20 industrialised nations in Buenos Aires, held from 30 November to 1 December, French President Emmanuel Macron said the trade deal must wait until the policies of Brazilian President-elect Jair Bolsonaro become clear, in particular regarding climate change. In Argentina, logistics are just as important as trade deals, however, and improvements could help to narrow the price gap between Patagonian wool and the finer varieties from places such as Australia, the world’s biggest wool producer, O’Byrne said.
Southern Patagonia produces a shorter, weaker fibre due to the cold, dry climate and the sheep’s year-round exposure to nature.
These conditions could prove a selling point, though. “A lot has to do with how you come across and where you are coming from,” said O’Byrne. “And people want to hear about this.”
