Strong wool dubbed ‘white gold’ but supply constraints loom

Summary

Indian wool industry executives have called New Zealand strong wool 'white gold' at the 50th India Carpet Expo, describing it as the best raw material for high-quality carpets and rugs but difficult to obtain at stable prices. Held in Bhadohi, north-east India, the expo featured WoolWorks as the only stall themed on wool from its country of origin. WoolWorks business development manager Katie Riches said demand from Indian processors for New Zealand strong wool continues to grow, with New Zealand wool exports to India rising from NZ$40 million in 2024 to nearly NZ$85 million from June this year to date.

Over the decade to 2025, China's share of New Zealand wool exports fell from 57% to 34%, while India's share rose to nearly 25%. Riches said that after two decades of significant decline in sheep numbers and land conversion to pine forestry and dairy, the tight supply-demand situation turned this year in favour of New Zealand suppliers. Indian manufacturers reported that wool prices rose from NZ$4 per kilogram to over NZ$6.50 per kilogram in less than a year and continue to fluctuate, making forward pricing and budgeting difficult.

TC Bilandani of Haryana noted that the removal of the 2.5% tariff under the free trade agreement is not decisive in itself, comparing it with the 25% tariff borne by New Zealand growers in the late 1980s; he said New Zealand's sheep flock has fallen from over 60 million to just 23 million, and customers need to pay accordingly for quality. Riches believes now is a good time to sign more contracts and supply agreements covering seasonal demand.

Commentary

New Zealand strong wool has been dubbed 'white gold' by the Indian industry, underscoring its irreplaceability in high-end carpets and rugs. India, one of the world's largest producers of hand-made carpets, has a large concentration of weavers in the Bhadohi region with extremely high requirements for fibre whiteness, strength and dye adaptability, and New Zealand strong wool is the preferred choice for its cleanliness, bright white colour and fibre strength. Over the past decade, China's share of New Zealand wool exports fell from 57% to 34%, while India's rose to nearly 25%, reflecting a significant shift in the global wool trade landscape.

For NZ SME owners, this shift presents both opportunities and challenges: on one hand, growing demand from the Indian market and recovering prices (from NZ$4 per kilogram to over NZ$6.50 per kilogram) offer farmers the possibility of improved profitability; on the other hand, prices are highly volatile and Indian processors find forward pricing and budgeting difficult, which may lead them to seek alternative fibres or demand more stable supply agreements. WoolWorks business development manager Katie Riches said the current tight supply-demand situation has turned in favour of New Zealand suppliers, making it a good time to sign more contracts and supply agreements covering seasonal demand. For New Zealand wool exporters, especially small and medium-sized farms and traders, they should seize the Indian market's recognition of quality and lock in prices and volumes through long-term contracts to reduce the risk of auction market volatility.

At the same time, they need to note that Indian processors are highly price-sensitive; if prices remain high, they may increase purchases from other sources such as Saudi Arabia, Syria, Italy and the UK, or adjust their product mix. In addition, New Zealand's sheep flock has fallen from over 60 million to 23 million, with land converted to pine forestry and dairy, limiting long-term supply capacity; while this supports prices, it also means the industry cannot expand rapidly. Feedback at the India Carpet Expo shows that the origin and fibre quality of New Zealand wool have not been fully promoted, offering New Zealand companies an opportunity for branding and differentiated marketing.

By emphasising the origin story and performance advantages of 'New Zealand strong wool', they can build premium pricing power in high-end markets. At the same time, although the removal of tariffs under the upgraded China-NZ free trade agreement is not decisive, it reduces trade costs and helps the competitiveness of New Zealand wool in the Indian market. Overall, the position of New Zealand strong wool in the Indian market is improving, but price volatility and tight supply require companies to adopt more proactive contracting strategies and strengthen brand building to consolidate long-term demand.

Keywords: New Zealand strong wool, Indian carpet industry, wool exports, WoolWorks, tight supply, price volatility, free trade agreement, decline in sheep numbers

Source: farmersweekly.co.nz