By Matt Reese
In 1918 a small group of wool producers had a vision of cooperatively marketing their product to command better market prices for individual farms. The idea grew into Mid-States Wool Growers Cooperative with, at one point, 10,000 farmer owners marketing 6 million pounds of wool from 23 states.
In May, though, after more than a century of service to the nation’s sheep producers, Mid-States Wool Growers in Fairfield County — the last location of the cooperative — will be closing its doors.
“We’re going to quit taking in wool the first of May and then we’ve got to get the rest of it out of here throughout the summer — get it bailed and then get it sold,” said David Rowe, general manager of Mid-States Wool Growers. “We’re going into the fourth straight year with no future, no hope for the coarse wool market. Last year we only sold a third of the wool that we would normally sell. We sold half the year before that. The prices that we’re selling wool at are very low. We’re losing significant money on every load we sell. At this stage we don’t have the luxury of saying, ‘No, I think it’s worth more than that’ or ‘No we’ve got more in it than that.’ With the decision that was made by the board to close the business, time is of the essence to get rid of inventory.”
The Fairfield County facility includes a sheep and goat supply shop started in the 1950s, office space and a wool gift shop, along with a large, modern warehouse built in the 1990s for storing, sorting and grading the wool. The cooperative was also behind the Wool Room at the Ohio State Fair featuring wool clothing and sheep-related gifts.
The decision by the board to close was based upon a number of factors. One is the declining number of sheep in the United States, which peaked in 1884 at 51 million head.
“Part of what has driven this is we’ve got the lowest sheep inventory on record. There have been low wool markets in the past, but the cost structure was totally different in the past than it is today and the volume was different. Right now, the national sheep numbers are at 5 million and the breeding herd is around 2.6 million. That just makes it tough,” Rowe said. “We’ve had to go out further and further to try to maintain the volume we need to be efficient. We closed other locations around the country and got down to just this Ohio location in 2017 and in the past, we did not have to truck wool nearly as far. The fuel cost sure doesn’t make things easier. With the price of fuel and what it’s costing us to get wool brought into the warehouse, it just puts a lot of strain on things.”
In 2018, Woolrich, the oldest continually operating vertical woolen mill in the country, shut down.
“One thing that really hurt our prospects was when Woolrich went out of business. They were making some products that went into your medium department stores like Kohl’s and Target. Some of their better stuff was going into places like Macy’s or Dillard’s. When Woolrich went out of business, nobody replaced them and that pretty much forced the medium to coarser wools to go straight to the industrial use and industrial requires cheap input cost. That’s just the fact. There will always be a synthetic in competition for price. If you want a better price for your wool, it’s got to go against somebody’s skin. It’s got to be able to go into sweaters, suits, coats and even today you’ve got a lot of high-end woolen products that are being sold in these outdoor stores. That’s all being made from fine wool, be it the socks, leggings or shirts,” Rowe said. “Sheep producers like to raise sheep for a number of reasons. Typically, what the market is asking for isn’t one. The market has always asked for fine wool. It is the most versatile and it can be used so many different ways. Sheep producers are free to raise whatever it is that they’d like to raise for whatever reason they’d like to raise them, but the market for coarse wool has just gotten extremely difficult as we’ve lost markets.”
Fine wool sheep breeds include Merino, Rambouillet and Targhee, which produce wool with a micron count in the teens and low 20s and well suited for clothing. The majority of sheep in Ohio have breed genetics better suited to the meat market with medium, to coarse wool with higher micron counts in the upper 20s and 30s suited for carpets and rugs. Dark wool is limited for dyeing and is also of lower value.
“There’s no argument that these coarse wool, medium wool sheep are producing a high-quality market lambs and the last several years, the meat market in the Midwest has been very good, some years better than others obviously,” he said. “It’s been a balancing act — do you worry about a small amount of money, which is what we’ll typically generate with wool. Even at $1 a pound, the typical sheep shears 6 pounds of wool. That’s $6. We can all agree that the price just one market lamb brings to the producer is way more than $6, let alone if you have twins or triplets. That’s where the money in sheep is — the lambs — and it has been for quite some time.”
Like domestic wool markets, export markets have also fallen off dramatically for medium and coarse wool.
“There was nowhere to go with it. There has been no export market for 10 years for the coarse wool,” Rowe said. “Export markets are still there for fine wool, but we’ve not been able to get a bid for going on 10 years to be able to send coarse wools overseas and that just made the opportunities that much harder.”
In addition, the real estate value of the Mid-States Wool Growers central Ohio location has continued to rise, along with the property taxes.
“We’ve managed things on the cost side as strongly as we could and we sold a couple pieces of land that were still available that did not directly connect here to the to the warehouse. Our debt situation is in very good order, but you’ve still got to be able to cash flow,” he said. “We’re in an area that’s growing. This area is going to get very good at growing warehouses in the next three to five years, and there are going to be additional costs that are going to be assessed to the current property owners to allow that growth to happen. We were going to see an increase in taxes because of an increase in the appraised value for the property and still not see anything on the revenue side of the of the equation change.”
Rowe can only guess where Ohio wool will go after May 1.
“There is a wool buyer, wool warehouse in Forreston, Ill. They’ve been doing business throughout our territory. We’ve been competitors and obviously there will be some attempts by them to fill that void. The opportunity is always there for somebody to start a wool pool. There are still some of those in Pennsylvania, Virginia, New York, Illinois, and in the West. If you get enough volume then you can talk to some of the buyers direct,” Rowe said. “For Ohio producers, it’s not going to be convenient, but we weren’t getting all the wool in Ohio anyway. Some Ohio wool has already been going to Illinois.”
With a look at all of the various factors, the Mid-States board made a tough decision, but Rowe agrees it was the right one.
“Looking at the prospects of the future and the struggles of the last four years, the board just felt that it was in the membership’s best interest to close. Some members are going to say it was in their best interest to keep the building open, but sitting here managing the members’ investment in this company, you’ve got to look at if this makes sense,” he said. “We can try to run this thing into the ditch and be here a year from today having the same issues, but this time the bank was receptive to what the board came up with. They made sure it was it was clear that if nothing changed in the next 12 months we’d be in the same spot, just with less equity left in the company.”
By this fall, the property will be sold (above appraised value) and taken over by new owners, marking the end of an era for Ohio wool marketing.
“From the very beginning, Mid-States has always had the producers’ best interest in mind to manage what they entrusted to us and make sure that what we’re doing what makes sense. I think that’s the exact way the board continues to look at it. We’ve been having discussions about a lot of factors for about 18 months because it has been a tough environment,” Rowe said. “It wasn’t something that was taken lightly.”