Opportunity presents in sheep and wool

Mr Howie, the CEO of RMA Network and based in Bendigo, Vic, brings with his position nearly half a century of experience as a stock agent, riding the booms and busts of the wool industry.

"I want you to forget about last year and I know it's hard but last year was terrible," he said.

"In 40 years as a stock agent I've never seen anything like it.

"Everything went against the trend and our confidence disappeared."

Mr Howie pointed to the foot and mouth scare during the previous July as the starting point, when panic rolled across all of the livestock industries.

"I want to forget about that and talk about the good things," he said.

"I want to talk about confidence and one thing that builds confidence is relationships."

It was pleasing therefore, for Mr Howie that the Fox and Lillee company has the confidence in the long term future of the wool industry to make substantial investments in infrastructure.

"We spend all our lives bashing our business partners, the brokers, processors, the traders but without them we haven't got an end market," he said.

"Whether they are successful or not they are the reason our enterprises work."

Mr Howie recalled when he started in the wool industry in South Australia, many Merino clips measured in the 24-micron range, and he noted that during the following decades the clip has become considerably finer.

"There has been a complete change in the industry," he said.

"You can't find a 24-micron fleece today, but I want to talk about what we have forgotten along the way.

"Those sheep which grew those fleeces were an absolute carcase animal and yet we focused so much on wool that we allowed some other diverse breeds to come in and say 'look at what we've got'.

"But at the end of the day the Merino always had it."

Mr Howie went on to bring up the numbers of sheep relative to global population, to add strength to his argument that the Merino can be both a carcase animal and a wool grower.

"In 1988 there were 180 million sheep in Australia - it was unbelievable - and there were 5.1 billion people in the world," he said.

"Now we have nine billion people in the world and growing exponentially while we now have only about 70 million sheep in Australia."

And if we were to take a look at America, he said the US cattle herd is the lowest it has been since 1951.

"That number is causing a bit of a panic because in 1951 the global population was about 3.8 billion people," Mr Howie said.

"So all of a sudden we've got less cattle, we've got less red meat being processed and many more people still have to eat."

Mr Howie said there have been many changes in the wool industry during the past 200 years, but two things haven't changed - the size and shape of the wool bales, and the fact we are still shearing manually.

"Another thing that hasn't changed is that the Merino sheep irrespective of season will do its best to pay the bills for the wool grower," he said.

"It doesn't matter whether it is skinny or fat, it will always be trying to push a clip of wool out.

"And year on year I've watched many people go into continuous farming and then they come to me and say - we haven't any money.

"And when I say 'why not?'. They say we have to borrow money to pay for the fertiliser to grow our crops which we never had to do."

Mr Howie said those farmers in the rush to grow more crops had forgotten about the wool clips they used once to grow, and about how suitable the Merino was when a crucial element in the farming enterprise.

"Do not let anyone tell you there's not a place in Australia, especially in Australia of all the countries in the world, for Merinos," he said.

"They have been especially bred to be adaptable to the environment and still produce a fleece which has global demand.

"But we need to get the Merino wool/meat enterprise away from an emotional level to a commercial level.

"We need to stop being in love with the sheep just because 'I have been in the industry for so many years it has to be'."

From his agency perspective, Mr Howie has absolute confidence in the Merino, besides it's wool production capacity.

He told his audience that he could not and would not advise interference in their wool enterprise, but he was in a position to make some suggestions as to how more profit could be gained from their sheep enterprise.

"The Merino wether lamb is the lowest commodity outside the ewe," he said,

"But for some reason everyone wants to trade crossbred lambs and I couldn't convince people to buy exceptionally well bred Riverina lambs before Christmas at $20 to $30."

In the market since then, Mr Howie has been watching those trades of Merino wether lambs with fascination.

"I would say with a clip of wool at say $15 plus shearing costs, there have already been sales of those lambs at $90 to $120, purchased during the last week in November and sold in January," he said.

"The Merino wether lamb is an absolute trading goldmine if you are prepared to do the work."

Mr Howie said the next opportunity to buy is up until the end of April because as soon as the diesel smoke starts to puff Merino wether lambs will be dumped onto the market.

He also pointed to the change in the dentition rules of how lambs are now aged and how this has impacted on the market.

"Instead of a lamb cutting its teeth at 13 to 14 months you now get another month because the teeth have to be through not just erupting," he said.