All producers who delivered wool to a British Wool grading depot or intermediate depot in 2020 will receive a payment, albeit considerably less than in previous years.

That was the good news story from the Bradford-based co-operative this week which admitted the impact of the Covid-19 pandemic was the biggest 12-month challenge in its history, due to reduced global demand and significant over supply as a result.

When the first Covid lockdown was imposed in March 2020, wool scouring plants in the UK closed and manufacturers stopped processing. Exports were also put on hold. There was in effect no market and British Wool closed the 2019 season with 11mkg of stock unsold.

However, the move to online auctions and a restructuring of its grading depot network in January will see a reduction in handling costs of 7p per kg which will translate into additional value for producers over the medium to long-term.

As the new shearing season begins, British Wool’s stock overhang from 2019 has been successfully cleared and, as the market starts to recover, the co-operative owned by some 35,000 UK sheep farmers, will close the 2020 clip year with minimal stocks.

Auction prices have also started to recover since February of this year with the average now around 67p per kg, compared to just 50-55p for most of the last 12 months.

Andrew Hogley, CEO said: “Despite the challenging year we have had, British Wool is still making a payment to producers for their 2020 clip. The total return averages 15p per kg, which is still a long way below where we need it to be but we are optimistic that we will see a further price recovery through the course of the next year.

"A healthier stock position, reduced cost base and recovering auction prices puts British Wool in much stronger position to deliver better value for our producers in 2021."

He admitted that the 2020 clip had been 12% down on 2019 levels, due to reduced sheep numbers in some areas, an earlier clip, and some producers holding on to their wool when end prices were so low.

Jim Robertson, a sheep farmer from Dumfriesshire in Scotland and chairman of British Wool added: “British Wool is a co-operative and we firmly believe that the collaborative marketing of the UK wool clip is the best way to deliver value for wool producers.

"If anything, this principal is even more essential today than it was when British Wool was established in 1950. The wool clip needs to be sorted and amalgamated into commercial weights if it is to be used by manufacturers and achieve value for producers.

“In 2020 we handled less wool due to a small number of producers not seeing value in delivering their wool. This in turn had a negative impact on our operating cost per kg. The more wool we handle the more cost effective our operations become which in turn allows us to return more value to all producers.

"Every kg of wool British Wool handles makes an important contribution to supporting your organisation ensuring we can continue to provide a high standard of service to all producers, drive demand for British wool with our customers and downstream manufacturers, work with universities and industry on new product development and finally, continue to represent your best interests as wool producers.

“I’d encourage all producers to support British Wool and for those who have wool from 2020 still on the farm, to deliver this into British Wool this season.”