As one of the leading players in the industry, challenges in Lesotho certainly affect sales and production in South Africa. The suspension of wool shipment in the past for instance, had an impact on sales.
In a report released by South African broker BKB last week, a slight drop in sales was recorded during the 18th wool auction of the 2020/21 sale season.
“On the 18th wool auction of the 2020/21 sale season, the merino wool market indicator decreased by 0.5 percent to close on 15145c per kg clean wool,” the report revealed.
Prior to the slight decline, the merino wool market indicator had increased by 5.5 percent to close on 15225c per kg clean wool.
Wool and mohair are the main agricultural exports in the country and Lesotho is the world’s second largest producer of mohair after South Africa. It produces around 14 percent of the global mohair.
Marketing of Lesotho’s wool and mohair is unique for smallholder producers. Individual smallholder producers are marketing most of their fleece wool directly on a major international auction market in Port Elizabeth, South Africa, where wool and mohair are primarily handled by the marketing agent BKB.
Despite the slump in the sales of merino wool, local players are clearly not concerned, saying that in fact if things go accordingly, the country can move towards becoming the world leader in wool and mohair production.
Currently, Australia and South Africa are leading the pack in production, leaving Lesotho in third place.
The Lesotho Wool and Mohair Growers Association (LWMGA) said in an interview with Metro on Monday that while the 2018 regulations may have caused damage in the industry, it is difficult to determine whether or not the farmers have lost hope in the industry.
If the farmers decide not to invest in the industry anymore due to challenges posed by government intervention, the global industry will certainly be affected, considering the role played by Lesotho in the sector.
South Africa’s broker BKB will also feel the negative impact resulting from loss of potential clients.
“It is difficult to say whether or not people are losing hope at the moment because the situation is changing for the better. At the same time, we are not in a position to encourage or discourage people to join the industry. People should make their own analysis including the challenges before making any decisions.
“This is because most of the challenges that we come across are caused by the government, so it means we do not know what is going to happen next. But now things are getting back to normal,” said the chairman of the LWMGA, Mokoenihi Thinyane.
He added that even the farmers who were struggling to receive their payments have now started getting paid since December.