The Payment System
British Wool is a farmer owned organisation which, after a grading process, sells wool on behalf of its producers in a series of auctions over a 12 month period. We handle your wool and sell it on your behalf.
The price paid is the average of that attained over all of the sales during the year, less handling costs, resulting in the same grade of wool being paid the same price irrespective of where you farm; the size of your clip or when your wool is received.
The average price gained is not known, and cannot be calculated, until the end of the selling season, and payment is made to you on receipt of your following year’s clip.
Payment is made up of two parts, one an Advance Payment when the wool is delivered into the Board, and the second a Balance Payment which is paid when the following year’s clip is received.
Frequently Asked Questions
- Why do British Wool not pay the full amount straight away?
British Wool simply does not have the funds to do so as the wool is auctioned on behalf of the producers throughout the year. At the end of October each year upwards of 90% of the wool has been received by depots, but only 25% of the clip will have been auctioned.
- Why do British Wool not pay a much higher advance payment?
- The wool market is a global market reliant on many factors outside the Board’s control. Auction clearances and prices can be volatile, with potential movements of up to 50% during the season. The amount of unsold stock can vary enormously.
- British Wool have to have sufficient funds in order for it to have the ability to be proactive when selling in the auctions and make decisions whether to sell or hold stock so the maximum price can be achieved for producers.
- What about new producers?
British Wool are keen to identify and help genuine new producers into our industry and encourage them to be part of the collective strength of the organisation, to ensure they get the best price for their wool.
From a Cash Flow perspective the effect of the payment system is only felt in the first year.
The current payment system has been developed to allow the Board to operate in any market situation and to use its collective strength within the market place in order to ensure you receive the true market value of your wool.
It is important to remember that British Wool do not buy wool – we sell your wool in organised auctions, realising its highest potential value.