WoolProducers Australia will delve into onshore processing options and how to tap into new markets thanks to a federal government grant.
The $662,000 grant is part of the Australian Government's Agricultural Trade and Market Access Cooperation program and will fund a project called Ensuring a sustainable Australian Wool Industry through market diversification and risk mitigation.
The project will undertake a feasibility study that will be undertaken in two parts, the first being an economic assessment of domestic processing.
WoolProducers CEO Jo Hall said the study would aim to investigate the viability of domestic wool processing.
"It's sort of always been a question given that we export around 93 per cent of our raw wool why aren't we doing more processing at home... going back to the 1990s we had a moderate early-stage processing sector in Australia but that went off-shore like so many of our manufacturing sectors for various reasons including increased wages and energy costs," she said.
"What we want to achieve through this grant is either rule it in economically, or rule it out because we don't want to set up a sector that's just not going to be viable going into the future."
Ms Hall said that the industry needed to look at all the barriers to re-establishing domestic processing as well as the potential economic benefits that could come from having greater onshore processing options.
"We identified early on in the process that the critical choke point in wool's long supply chain is early stage scouring, carbonising and top-making, so we focused our energies on seeking funding to thoroughly assess this proposition," she said.
The second part of the study will assess opportunities to develop or enhance processing capacity in diversified onshore and offshore locations.
Agriculture minister David Littleproud said the grant would have help identify new opportunities for the Australian wool industry.
"By looking for alternative markets for our wool, we can make sure we aren't falling into the trap of putting all our eggs in the one basket," he said.
It is expected that both stages of the feasibility study will be completed within a year, with the final report to be made publicly available.
Further reading:
Have you signed up to The Land's free daily newsletter? Register below to make sure you are up to date with everything that's important to NSW agriculture.