Under-weight bales wasting woolgrowers’ money

News release - Under-weight bales wasting woolgrowers’ money, says senior wool executive

New Zealand woolgrowers sending under-weight bales to market are costing their industry more than $1.3 million per annum, says a senior wool industry executive.

Malcolm Ching, manager for the Purelana brand developed by the country’s leading wool scourer and exporter New Zealand Wool Services International, says farmers can improve returns for themselves and the whole industry by ensuring all wool bales are sold at or above a viable weight.

“An estimated 20 per cent of bales are currently packed and presented for sale too light.

“That loads on unnecessary extra cost throughout the transport and processing chain, cost borne by farmers themselves. Additional costs from packing bales under weight include the cost of the wool packs, cost of freight, cost of handling at sale, cost of storage and load out costs at the scour or processor.

“Those costs may seem insignificant taken individually, but aggregated together for all growers, they are a serious burden on the whole industry. For example, we estimate that, based on current stock numbers and returns for wool, farmers presenting under weight bales have reduced the New Zealand Wool Services International profitability for our latest financial year by $365,000. Since woolgrowers own a significant proportion of our shares, that further bites into their own bottom line.

“In these tough economic times, with export prices hit, woolgrowers do not have money to burn. However, judging by the number of wool bales sold substantially under weight, many are in effect burning their money,” he said.

Malcolm Ching advises woolgrowers that an easy remedy is within their grasp

“Growers and their contractors must press heavier bales. Growers need to know what weight is required and inform their contractor accordingly. Both then need to monitor what goes out of the wool shed,” he said.

According to Malcolm Ching, the official greasy weight range is between 100kg and 200kg per bale. For higher density wools such as merinos and some bulky wools like the down breeds, bales at the lighter end of this scale are acceptable. However, bales of coarse wools should be around 160kg to 200kg, with an average of 180kg.

“The number of crossbred wool bales coming onto the market around 125kg greasy is astounding.

“As well as the cost, there is also a safety issue with under-weight bales. Soft bales make unstable stacks, creating a significant safety hazard that can pose risk to those working with the wool further down the chain,” he said.

Calculation: how under-weight bales cost woolgrowers over $1.3 million per annum

Coarse wools bales should be around 160kg to 200kg, with an average of 180kg.

Approximately 20 per cent of crossbred wool bales come onto the market around 125kg greasy: 55kg under weight.

Therefore for a 15 bale line of wool, an extra five bales is generated.

The cost to the farmer for either new or second-hand packs is around $7.50 per pack, or $37.50.

The cost of freight from farm to store varies on grower location, however, the national average is around $5.00 per bale.

Total so far is $62.50 for the extra five bales.

Additional selling costs incurred in handling the wool can be calculated as follows: extra bales mean extra charges. For the broker/merchant it requires more storage, costing exporters an additional 20c/kg in average storage charges, or around $125 before shipping or processing.

Then there are higher freight and load out charges to the scour or processor, where per bale charges apply for handling.

This extra handling for the five bales has now incurred an additional 11c/kg greasy if going for local scouring, or 14c/kg if shipped in the greasy state, equating to approximately $78.

This now adds up to a totally unnecessary cost of $265.50 or around 42.5c/kg.

On the basis that around 20 per cent of bales are currently packed light, based on current stock numbers, the overall cost to the industry is around $13 million.

ENDS

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