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Wednesday, 20 February, 2002, 16:00 GMT
Australia enjoys wool boom
a sheep
Australia is home to 111 million sheep
Australia's hard-pressed sheep farmers are celebrating recession-busting record prices for their wool as the industry climbs out of a decade-long trough.

At nearly 10 Australian dollars a kilo, the good times are back.

Australia is the biggest wool producer in the world, with its 111 million sheep producing about a third of overall world wool supplies.

But this year they are expected to produce less than 600,000 tonnes of wool, down more than 100,000 tonnes on the levels of a decade ago.

Wool vs cotton

The low prices of recent years have triggered massive cutbacks in the national flock, as the wool business has lost ground to the rapid rise in Australian cotton growing.

Cotton bale
Cotton: losing ground to wool
But now cotton is facing a global glut, and the tables have turned.

Woolmark, the national wool promotion group, says stocks are at a 30-year low, partly caused by good prices for sheep meat.

The 4.7 million tonne national stockpile brought into being by the collapse of a reserve price scheme in 1990 has now finally disappeared.

And neighbouring New Zealand is similarly seeing sheep numbers continue to fall.

Dollar down, prices up

Wool's surging price caps a good year for Australia's primary industries, as the sliding Australian dollar has effectively counteracted the steady fall in commodity prices.

Commodities make up 60% of Australia's exports, and record prices for coal, iron ore, beef and mutton, wheat and even precious metals - at least when figured in Australian money - have helped the economy to evade the doldrums experienced around the world in 2001.

But there could be trouble on the horizon.

Farmers are busily starting the process of restocking their flocks, and with prices guaranteed to come down at some point there remains the risk of a rollercoaster, triggered by stocks running out of balance with prices.

See also:

18 Feb 02 | Business
Asian economies on the mend
21 Jan 02 | Business
Australia's economic miracle?
13 Dec 01 | Business
Australia unemployment falls
10 Dec 01 | Asia-Pacific
Australia's farmers looking for love
20 Nov 01 | Asia-Pacific
Steep rise in Australian land clearance
22 Aug 01 | Business
Disease blights wool market
01 Mar 01 | Asia-Pacific
Australia's livestock fear
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