PrepTest C2, Section 4, Question 2

The 50 million sheep of New Zealand outnumber its people 13 to 1, the highest such ratio in the world. At the wool industry's peak, in the 1950s, the wool growers of New Zealand delivered well over a third of that country's total export revenues. Yet this figure has declined drastically, as has the industry's profitability. New Zealand is second only to Australia in total wool production and is the world's largest producer of "strong wool," a relatively coarse wool characteristic of crossbred sheep that is used mostly for carpets. But for the past 20 years, competition from synthetics has inexorably driven down the price of clean strong wool, causing annual production to drop by 65,000 tons as farmers switch land to other uses. Thus wool has fallen behind beef, lamb, milk, butter, cheese, fish, fruit, and wood and pulp as an agricultural export earner.

Rather than raising wool prices, the only reliable route to profitability lies, as in any agricultural enterprise, in improving productivity. New Zealand's commercial sheep farmers need to achieve the same kind of annual productivity gains that manufacturers of synthetic materials have recorded. This goal could readily be achieved if the industry as a whole were to adopt the management and breeding practices of the country's leading (and comfortably profitable) wool growers.

Gains on the order of those achieved by the world's cotton growersÔøΩwho on average have been improving productivity at several times the rate of wool growersÔøΩcan come wholly through better farm management. At present, wool growing in New Zealand, like agriculture everywhere, is deeply divided. On the one side are professional operations that exceed market returns, with 30 percent of farms achieving double the average profitability and the top 10 percent achieving 3 to 4 times the average. On the other side are family farmers willing to receive a substantially lower return to maintain their lifestyle.

To encourage increased overall productivity, the establishment of a commercial genetic research company (which would concentrate on genetic selection for crossbreeding sheep, not on the artificial manipulation of genetic material in individual sheep) is recommended. This would represent a shift in spending away from industry efforts to improve the efficiency of wool processing (for example, by lowering spinning costs) and toward efforts to cut the cost of producing a given unit of raw wool or to increase the quality of raw wool produced. Enormous gains in overall productivity could be made through genetic improvement. The best of New Zealand's sheep produce wool worth significantly more than the wool of the country's average sheep, and these superior sheep can be identified and kept as breeding stock.

The 50 million sheep of New Zealand outnumber its people 13 to 1, the highest such ratio in the world. At the wool industry's peak, in the 1950s, the wool growers of New Zealand delivered well over a third of that country's total export revenues. Yet this figure has declined drastically, as has the industry's profitability. New Zealand is second only to Australia in total wool production and is the world's largest producer of "strong wool," a relatively coarse wool characteristic of crossbred sheep that is used mostly for carpets. But for the past 20 years, competition from synthetics has inexorably driven down the price of clean strong wool, causing annual production to drop by 65,000 tons as farmers switch land to other uses. Thus wool has fallen behind beef, lamb, milk, butter, cheese, fish, fruit, and wood and pulp as an agricultural export earner.

Rather than raising wool prices, the only reliable route to profitability lies, as in any agricultural enterprise, in improving productivity. New Zealand's commercial sheep farmers need to achieve the same kind of annual productivity gains that manufacturers of synthetic materials have recorded. This goal could readily be achieved if the industry as a whole were to adopt the management and breeding practices of the country's leading (and comfortably profitable) wool growers.

Gains on the order of those achieved by the world's cotton growersÔøΩwho on average have been improving productivity at several times the rate of wool growersÔøΩcan come wholly through better farm management. At present, wool growing in New Zealand, like agriculture everywhere, is deeply divided. On the one side are professional operations that exceed market returns, with 30 percent of farms achieving double the average profitability and the top 10 percent achieving 3 to 4 times the average. On the other side are family farmers willing to receive a substantially lower return to maintain their lifestyle.

To encourage increased overall productivity, the establishment of a commercial genetic research company (which would concentrate on genetic selection for crossbreeding sheep, not on the artificial manipulation of genetic material in individual sheep) is recommended. This would represent a shift in spending away from industry efforts to improve the efficiency of wool processing (for example, by lowering spinning costs) and toward efforts to cut the cost of producing a given unit of raw wool or to increase the quality of raw wool produced. Enormous gains in overall productivity could be made through genetic improvement. The best of New Zealand's sheep produce wool worth significantly more than the wool of the country's average sheep, and these superior sheep can be identified and kept as breeding stock.