5    International commercial potential, demand and price trends

5.1 International standards for wool and fibre assessment
5.2 Wool

5.2.1 Consumer trends

5.3 Mohair
5.4 Karakul pelts
5.5 Cashmere
5.6 International interest in importing from Central Asia

5.1 International standards for wool and fibre assessment

Wool and other animal fibres are traded and priced on the international market according to a number of special criteria. These include fibre diameter, expressed in microns (µm), fibre length, lustre ('shinyness'), crimp ('wavyness'), and percentage yield of clean fibre from raw fibre, following scouring (washing) to remove vegetable and mineral contaminants and wool grease. In the case of cashmere, 'yield' is the percentage of clean down fibre left after removal of the coarse outer coat from the fine downy undercoat.

5.2 Wool

Prices are shown here are for greasy wool/fibre, which is the unwashed raw product. A comparison of terms used to describe wools by their fibre diameter is given in Table 4. Coarse wools primarily used for making carpets are in the range exceeding 30 µm. Trade prices are highly sensitive to quality characteristics, as established through measurement of these criteria for every consignment of wool/fibre.

Table 4. Comparison of grading systems for wool.

The wool sold by producers in Kazakstan and Kyrgyzstan includes fine, medium and strong types. For producers to meet the quality criteria demanded by the textile trade, it is necessary for their wool and fibre output to be sorted, graded and tested to internationally recognised standards. During the 1990s, most wool and fibre produced by farmers in Kazakstan, Kyrgyzstan and Turkmenistan was sold in bulk in undifferentiated lots to national buyers, who paid the lowest price based on the lowest grade, despite the inclusion of higher-quality fibres. Under this system, there was no price premium to producers for selling higher quality fibres. Moreover, national buyers and government livestock officials are not generally aware of the world market values for the products. Therefore they are unable to pass this information on to producers. Producers therefore have no incentive to sort wool/fibre according to market values for different qualities. In Kyrgyzstan, there is a market price information bulletin that lists world prices for agricultural commodities, but producers rarely receive this information.

However, rehabilitated national wool processing factories in Kazakstan and Kyrgyzstan have started offering premium prices for better-quality fine wool. The problem remains, however, that neither producers nor most local traders know how to sort wool into the relevant grades.

Previously, in the Soviet period, state farms organised for wool and fibre to be sorted at source, bulked by grade at regional rural centres and tested for quality at national research laboratories. Some was then exported to countries outside the Soviet Union. For example, the Soviet Union formerly supplied about one-quarter of the camel hair sold outside the Union. This state system has completely broken down in the three countries.

The last 10 years have seen marked fluctuations in wool price, as the wool trade has suffered increasing competition from synthetic fibres. The lower raw wool prices have not stimulated greater demand, and global textile industry consumption of wool has also continued to decline. These trends are illustrated in Figure 4, which shows the trends in international quotations for three grades of US wool.

Source: Wool Record (2002).
Figure 4. Prices for three grades of US raw wool, 1991–98.

Prices in Figure 5 are the mean selling prices for fine and semi-fine wools at the Bradford wool auctions in UK. Starting in mid-2001, prices for wool have been rising again, with a quoted price of US$ 1.00 approximately for raw wool of the semi-fine type in early 2002 (Wool Record 2002). World prices for fine wool in particular are reported to have risen (IWTO 2002).

Source: British Wool Marketing Board, personal communication.
Figure 5. Bradford, UK, wool indicator prices, 1994–2000.

5.2.1 Consumer trends

The amount of real personal income allocated to discretionary consumer expenditure has declined in most countries (USA and UK being exceptions) over the past decade. Moreover, apparel's share of that expenditure is being eroded as consumers choose to direct more of their income to travel, home electronics and other recreational activities.

Changing fashions have seen an increased shift from formal wear (wool's stronghold) to smart casual and relaxing leisure wear, and this trend is expected to continue in the foreseeable future. Surveys by the Woolmark Company have shown that consumers in wool's target market still wish to look good and feel confident in their business clothes, but they wish to exercise greater freedom of choice than is offered by coats, suits and skirts.

Other product features being sought by consumers, which will impinge on wool's long-term suitability as a textile fibre, include:

• Softness–handle and next-to-skin comfort
• Light weight–average weights of both worsted and woollen fabrics have declined by up to 15% over the past 10 years
• Easy care–has assumed greater priority in order to create more time for leisure.

These market changes suggest that there is possibly a good future for fine and superfine wools, and for other qualities that have potential for use in innovative products. Poorer quality wools are likely to continue to lose market share to synthetic alternatives.

World wool production reached a 40-year low in 1999, and Woolmark estimate that there will be further reductions over the next two years. During 2000, the market for Merino wools at least picked up, reflecting concern at low fresh-wool supplies, and a Chinese policy to stockpile wool. The price range per grade of Australian wool is given in Figure 6. The Australian market indicator price for clean wool in June 2000 was US$ 4.25/kg.

Source: Wool Record (2002).
Figure 6. Price range per fibre diameter for Australian Merino wool, June 2000.

5.3 Mohair

The Angora goat produces a high proportion of its fleece (>99%) from secondary hair follicles. This fibre, mohair, is coarser (20–40 µm) than cashmere, and differs in many important quality characteristics. Mohair is lustrous, and the fibres have a wave, rather than the tight crimp of cashmere. Angora goats typically produce 3–4 kg fibre per year, harvested every six months by shearing. The crossbred Soviet goat breeds introduced in Kazakstan and Kyrgyzstan include Angora types.

Central Asian mohair is traded internationally in small amounts. No quantitative information was found on prices and volumes shipped, but it is thought that most is used in China (D.B. Holdsworth, personal communication). Central Asian mohair is coarse and has a low yield in comparison to that originating in the main producer regions of South Africa, Texas and Turkey, and this is a serious impediment to trade with western merchants and processors.

The industrial demand and price for mohair is vulnerable to cyclic variations in fashion. Heavy downward pressure on prices has resulted in difficult trading conditions and poor profitability for producers in the main production areas—South Africa (60% of total) and Texas. World production fell by about one-third during the 1990s (Alfa Tops, personal communication). Premium prices are paid only for the best quality fibre. Figure 7 gives recent prices.

Source: Wool Record (2002).
Figure 7. Prices for three grades of Texan mohair, 1991–99.

The prices for South African mohair in June 2000 are given in Table 7, section 5.5. The current strong market for finer grades has tended to direct much of the international trade towards South African mohair. Output is not forecasted to rise from the current level of 4.5 million kg (Mohair South Africa, reported in Wool Record 2002).

5.4 Karakul pelts

Karakul pelts are mainly sold semi-annually at auctions in western Europe. For the past few years these have been held at the Danish Fur Centre in Copenhagen. Since the break-up of the Soviet Union, few pelts from Central Asia reach the European auctions, and those that do are sold by Russian firms. For example, a German firm purchases pelts from Uzbekistan through a Moscow firm.

Two countries-Afghanistan and Namibia-now dominate the international pelt auctions (Table 5). Namibia markets all its Karakul pelts through the trademark 'Swakara', organised by the Karakul Producers Association which ensures strict quality, grading controls and fair prices to producers. In 2001, some 335 thousand pelts were auctioned, of which 60% were supplied from Afghanistan, with the remainder from Namibia. It is possible that some pelts designated from Afghanistan may in fact originate from Central Asia.

Table 5. Price per Karakul pelts, 2000.

5.5 Cashmere

In most breeds of goat, there is a high proportion of coarse fibres (>30 µm) derived from primary hair follicles, together with variable proportions of finer undercoat fibres (12–25 µm) produced by the surrounding secondary follicles. These breeds are said to be double-coated. Some of the hardier breeds of goat produce a high proportion of this undercoat (around 30–50% by weight) with a mean diameter less than 18.5 µm, which can be harvested, either by combing or shearing and separated in an industrial process (dehairing) as cashmere down from the coarse guard hair. Goats that have been selected for cashmere production grow typically between 100–350 g of down/head per year—one of the most luxurious, and valuable of all animal fibres.

World cashmeres are judged against the industry standard, which is Chinese white. This grade accounts for some 50% of all cashmere produced in the world. Mongolia is the second biggest producer of cashmere. Cashmere buyers have tight specifications for quality based on a number of parameters, most importantly: mean fibre diameter, the diameter distribution of fibres in the fleece, degree of crimp and lustre. The quality of all cashmeres is defined by their similarity to Chinese white. This has important implications for the breeding strategies for cashmere goats in other countries. In particular, it limits the use of animals carrying Angora genes which, though tending to have a higher yield, such as some of the Russian breeds e.g. Don and Altai Mountain goats (500–650 g and 450–600 g cashmere down/year, respectively), are often coarse and lustrous, with intermediate fibres, which make adequate separation of down from guard hair difficult.

The cashmere currently being sold by producers in Central Asia derives from cross-bred Soviet breeds with Angora characteristics and is usually a coarse product, with a mean fibre diameter in the region of 19–19.5 µm. The fibre is sold to dealers, and eventually reaches dehairing plants in China and Mongolia. In 2000 there were no dehairing plants in Turkmenistan, Kazakstan or Kyrgyzstan. By 2001, at least two small plants had opened in Kazakstan, and one was being planned in Kyrgyzstan. In 2000 the price paid by international importers to traders in Kazakstan for undehaired raw cashmere was in the region of US$ 17/kg raw, up from US$ 10/kg in 1999 (D.B. Holdsworth, personal communication). The prices paid for the dehaired fibre reflect the mean fibre diameter of the product (Table 6). The coarseness and character of Central Asian fibre, which has some mohair characteristics due to the Soviet crossbreed influence, make it unattractive to many of the major companies that specialise in cashmere manufacture. Figure 8 shows market women sorting raw cashemere in Kazakstan.

Figure 8. Market women sorting raw cashmere in Taraz, Kazakstan.

Table 6. Local trade prices for dehaired cashmere from different sources.

Table 7. Prices of raw  South African, June 2000.

Figure 9 illustrates the marked fluctuation in prices, considered in the industry to have been following a 5–6 year cycle. Prices shown are trade wholesale prices, not producer prices. These cyclical fluctuations are a major problem for producers. The pattern of peaks and lows has a number of causes. One of these is the tendency of companies to stockpile cashmere during times when the price is relatively low. This pushes prices up for a time, but is then immediately followed by a drop in industry demand. In 1998, low prices prompted Chinese farmers to cull goats, and the Chinese national herd was reduced by 25%. The upturn in prices through 1999 was stimulated by Chinese mills processing cashmere for sweaters in the USA, which experienced a surge in demand for quality knitwear. By 2000 demand was heavy, reflected in higher prices (Figure 10).

Source: D.B. Holdsworth, personal communication.
Figure 9. Evolution of cashmere wholesale prices (US$/kg, dehaired Mongolian, 16 µm).

Note: Price is for raw cashmere paid to herders. 
Sources: Bakey et al. (2001); FAO (2002).
Figure 10. Goats and sheep population and cashmere prices in Mongolia, 1992–2000.

5.6 International interest in importing from Central Asia

All companies consulted reported the lack of reliable financial institutions to be the primary reason inhibiting willingness to trade in fibre and pelt products from Central Asia. All companies that did use Central Asian fibre products acquired this fibre via an intermediary country, mainly China, Mongolia or Russia. This is probably because the level of trade in other products between these countries permits deals to be made on the basis of barter for other commodities, without the need for a cash transaction. This option is not normally open to western industrial buyers. Facilities for handling and guaranteeing bank transactions for purchase of fibre are not trusted, and processors expressed reluctance to strike big deals using cash payments.

For example, a large Karakul pelt importer in Germany was buying pelts originating from Uzbekistan marketed through Russia. This company would be interested in buying directly from Central Asia but only if the pelts were sent to a forwarding agent in Germany and payment would be completed only after inspection in Germany. Certificates of origin and veterinary control are required to import pelts into the EU.

The Namibian Karakul Association has expressed keen interest over the past five years to establish links with Central Asian Karakul research institutes, and to develop marketing and processing joint ventures with Central Asian Karakul producers and entrepreneurs. The Namibian Karakul Association is a government-sponsored farmers' union, which purchases and sorts Namibian Karakul pelts, marketing them internationally under the brand name of Swakara. Karakul production is limited in Namibia, which also lacks some of the more valuable genotypyes developed by Central Asian researchers. The Association also wishes to carry out exchanges of genetic material with Central Asia and to give technical advice on processing pelts to Central Asian firms.

Wool, cashmere and mohair, currently available from Central Asia, were considered to be of inferior quality to more easily available alternatives from other countries, further reducing the price that companies would expect to pay. A noted decline in quality has occurred since the collapse of the Soviet Union. A leading USA cashmere company reported that they used to buy cashmere and camel hair during the Soviet era from Kazakstan and Turkmenistan, and would be interested to do so again if a reliable mechanism for making large cash transactions is established.