South Africa's Wool Industry Halts Weekly Sale on Foot-and-Mouth Outbreak

South Africa’s wool industry has canceled a weekly auction scheduled to take place in Port Elizabeth tomorrow and will assess whether to hold further sales after exports of cattle, sheep, pigs and their products were banned because of an outbreak of foot- and-mouth disease.

“The country’s two biggest exporters say it’s no use having the sale because we can’t export anything,” Ona Viljoen, a spokeswoman for Cape Wools SA, an industry body, said from Port Elizabeth today. “This will have grave consequences for the local wool industry.” The exporters are G. Modiano SA and Standard Wool SA.

The decision to halt the auction was made by the South African Wool & Mohair Buyers Association, a nine-member group of wool and mohair buyers. South Africa’s wool industry supports as many as 18,000 farmers who have combined flocks of 14 million sheep and produce about 50 million kilograms (110 million pounds) of wool annually.

The Pretoria-based Department of Agriculture, Forestry and Fisheries announced yesterday that it has halted exports for at least three months after about 300 animals tested positive for the virus in KwaZulu-Natal province. South Africa is the world’s second-largest producer of wool for the textile market after Australia. Main export destinations for the country’s wool have traditionally included Italy, France and Japan as well as China, according to the agriculture department.

Rift Valley Fever

Wool exports to China have already been halted by an outbreak of Rift Valley Fever and a Chinese delegation due to visit South Africa next week to discuss easing the restrictions may now be delayed, Tina Joemat-Pettersson, South Africa’s agriculture minister, told reporters in Cape Town yesterday.

Eighty percent of wool production in South Africa is exported in an unprocessed form. Greasy wool, as the fiber is known, is unwashed and poses a greater health hazard than wool that is washed and combed. Processed wool is not affected by the export ban, Viljoen said.

The value of greasy wool exports last season was 1.34 billion rand ($193 million), she said. South Africa is half way through its wool marketing season and has so far sold 620 million rand worth of the fiber, she said.

Job Losses

“Jobs may be lost and the long-term viability of the wool industry may be compromised,” Cape Wools said in a later e-mailed statement.

South African wool prices have risen 36 percent since December, with the benchmark Cape Wools Merino Indicator increasing 2.8 percent to 85.89 rand at an auction on Feb. 23. London’s Modiano and Bradford, England-based Standard Wool bought 59 percent of the wool on sale.

The disease was detected in the KwaZulu-Natal province while the wool industry is mostly in the neighboring Eastern Cape province.

Mohair SA, which represents south African mohair producers, will go ahead with a planned sale on March 8 as 85 of percent of the industry’s output is processed and won’t therefore be affected by the ban, Deon Saayman, general manager of the organization, said in an interview from Port Elizabeth. South Africa is the world’s biggest mohair producer.

To contact the reporter on this story: Lauren van der Westhuizen in Cape Town at lvanderwesth@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.

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