Economics centre of student sale visit

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Bob GarnantCountryman

A visit by WA agriculture students to Bibra Lake's Wool Selling Centre last week was a lesson in how global economics can impact on the value of the school's wool clip.

A group of 18 students from Cunderdin watched their school's 63-bale consignment reach a top price of 870 cents/kg greasy during a week when the AWEX regional indicators finished 1.1 per cent lower at sales in Sydney, Melbourne and Fremantle.

WA College of Agriculture, Cunderdin, sheep instructor Wayne Laird said the school's nine-bale top line averaged 17.6 microns, measured 91mm in length and had a yield of 62.9 per cent.

"The school has been using Australian Merino Society bloodlines for the past 18 years," Mr Laird said.

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"We run a flock of 800 self-replacing Merino ewes and also have a flock of 400 prime lamb breeders."

While it was the students' first visit to witness the wool sale, Mr Laird said prices were well down on last year when wool sold for record levels.

He explained to his Year 12 students that global economic uncertainty was the reason behind the lower prices.

_Countryman _ asked the students for a show of hands on their preference of either working with sheep or driving a brand new tractor.

Full credit must go to the school's sheep program because it was a unanimous decision that sheep were the way to go.

Further discussions gave credence to mixed farming programs as the better option, especially in times of economic uncertainty.

National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said the continued depressing of wool prices was caused by short-term uncertainty.

"Concerns are intensifying about Spain's ability to juggle its banking and monetary challenges," Mr Wilcox said.

He said India's GDP growth rate slumped to the slowest in nine years and a downward revision of GDP growth in the US in the first quarter of 2012 due to slower consumer spending than previously estimated.

"One positive for the future is that China's government has taken action to help support domestic growth through a series of measures since mid-May, including cutting interest rates by 0.5 per cent," Mr Wilcox said.

While economic uncertainty was dominating the recent trend in prices for raw materials, including wool, one factor which would help support wool prices was the available supply of wool.

"I estimate that world wool production will fall by 1.6 per cent in 2011-12," Mr Wilcox said.

Australian Wool Industries Secretariat's Peter Morgan said last week's falls in the Eastern Market Indicator (EMI) in both Australian and US currencies were the smallest since the beginning of May when the impact of the Greek crisis began to take effect.

"The EMI has fallen by 74c in Australian currency and by 140c in US over the four-week period," Dr Morgan said.

The Landmark Wool Weekly report said that in spite of the pull-back in wool prices, they remained above prices for much of the past four years.

"In the past two or three years, prices for sheep products (either wool or meat) have performed better than prices for other competing agricultural products," Landmark said.

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