Wool production

IBISWorld forecasts wool production to drop by 5.0% in 2024-25 to 114.0 kilotonnes as sheep numbers are expected to fall. Long-term declines in New Zealand's sheep population limit growth in wool production, particularly as many of New Zealand's sheep are also sold to meat processors instead of being kept for their wool. An ongoing trend has been the way farmers use the land. As profitability has increased for land used for forestry and dairy, many farmers have elected to reduce sheep number in favour of these trends, leading to a fall in wool production. Furthermore, drought conditions have compounded this and have contributed to a reduction in sheep flocks.

According to Beef + Lamb New Zealand, New Zealand was the third largest wool producer in the world in 2020-21 (latest data available), accounting for 9.4% of total global production. However, domestic wool production has fallen over the past decade. According to Statistics New Zealand (Tatauranga Aotearoa), the total number of sheep in New Zealand has fallen over the period, following a downward trend since the 1980s. The decrease in the total number of sheep in New Zealand has negatively affected wool production over the past five years.

Strong export demand for sheep meat has significantly influenced sheep farmers' production choices, prompting a notable shift from wool to meat production over the past five years. Rising lamb and mutton prices have led many farmers to sell sheep for slaughter rather than maintain them for wool, capitalising on higher meat market profitability. Consequently, wool production has declined more sharply than sheep meat production, as fewer sheep are retained for wool. The strategic pivot towards meat production affects current dynamics and may have long-term implications for the wool industry, including supply shortages and potential price fluctuations. Overall, IBISWorld forecasts wool production to fall at a compound annual rate of 2.6% over the five years through 2024-25.