THE wool industry will need a minimum seven per cent price premium for non-mulesed wool to breakeven the extra costs incurred in production and entice woolgrowers to alter their production practices.
This is according to Mecardo senior market analyst Robert Herrmann who believed a 15 per cent market premium for non-mulesed status wool was achievable, equating to 188 cents per kg clean premium, and would hasten the industry adoption to end the practice of mulesing.
“You need 7pc to cover the production cost of not mulesing but it is not an incentive,”Mr Herrmann said.
“You need a bonus to incentives people so a 15pc is arbitrary but reasonable.”
In a special Mecardo report, Mr Herrmann drew comparisons between the 178pc price premium paid for free range eggs and the opportunity which could be seized in the wool industry through a “welfare premium”.
The calculations were based on the estimated cost saving of 30cents per sheep/lamb of mulesing, shearers and crutchers expected 10c per sheep bonus for non-mulesed sheep and 50c for an additional fly treatment.
Increased flock mortality from 2pc to 3pc was estimated and additional animal husbandry expenses .
Based on these estimates, Mr Herrmann said the extra cost incurred by a non-mulesed sheep was $3.10 per head, or 89c/kg clean.
“Either the threat of market loss or a financial incentive work best to initiate change – there won’t be an across the board loss of markets if mulesing doesn’t cease so an incentive is needed,” Mr Herrmann said.
“This premium has either been too slow coming, or has not been enough as the volume of non-mulesed wool has grown at snail’s pace,” he said.