(Reuters) - Wool prices in Britain are at their highest in a quarter of a century and look set to stay, bringing relief to farms that survived years of having to shear their sheep at a loss, the head of the British Wool Marketing Board said.
Fewer sheep, strong demand from emerging economies such as India and China and a growing appreciation for British wool have
caused prices to more than double in the last three years, said Malcolm Corbett, the board's chairman.
At UK auction, wool now sells at an average of 180 pence per kg while in 2008 it went for as little as 70 pence.
"I'm not an economist, I'm a hill farmer...but it's clearly all a question of supply and demand," Corbett told Reuters by telephone on Thursday from Northumberland, where he has 800 Welsh sheep.
The revival for producers of wool, a fibre once so central to British prosperity that the Lord Speaker of parliament's upper house still sits on a sack of it, has hit the profits of carpet makers and fashion houses.
While recognising this was having an impact on consumers, Corbett said life for British producers of lamb meat and wool remains tough.
STILL VERY DIFFICULT
"We do understand that we have a country almost in recession and that, down the line, these prices are more difficult for some of the end users,... but eking a profit out of some of these commodities is still very difficult," Corbett said.
"The other thing to remember is that our costs in terms of feed, fertiliser and fuel are absolutely rocketing as well and, if we didn't have the prices we have, we really would be in a bit of a disastrous situation. "
Corbett said the years of depressed lamb and wool prices, where the 1.50 pounds it cost to shear each sheep exceeded the wool's final asking price, led some farmers to quit the industry, both in Britain and in top producer Australia.
The total population of sheep in the UK fell by nearly 50 percent over the last 10 years, he said, adding that flock numbers were not expected to grow significantly over the next few years, supporting wool prices into the future.
"Now the farmer can afford to pay the shearer and still have some profit left in his wool clip. The wool check is now becoming a meaningful income stream on the farm."
Carpetright, Britain's biggest floor coverings retailer, warned in February that high wool prices were weighing on profit, while luxury clothes retailer Ralph Lauren blamed rising input costs for a sharp drop in quarterly earnings in November.
The global carpet industry consumes 70 percent of UK wool.
Wool accounts for a mere 1-1.5 percent of the global fibre market, but initiatives such as the Campaign for Wool, backed by Britain's Prince Charles, have helped raise its profile.
Last year the campaign turfed over London's tailoring heartland, Saville Row, releasing sheepdogs to herd flocks of sheep along the street and promote wool's use in the fashion industry.
"We now feel like we're respected and valued as producers, which for a long time was not the case, what with all the talk of subsidies and overproduction," Corbett said.
"The world is going to demand an awful lot more food and clothing in the future,... all in all we have a positive outlook."
(Editing by James Jukwey and Anthony Barker)
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