Farmers Benefit from a Record Increase in Wool Prices

icelandic sheep

The board of Ístex has decided to raise the price at which it purchases wool from farmers by an average of over 48% for all processing categories. This is the biggest increase in wool prices in the last 15 years, Bændablaðið reports.

80% Farmer-Owned

Ístex was founded in 1991 to “carry on the Icelandic wool industry that started in Mosfellsbær in 1896,” as noted on the company’s website. Ístex buys directly from farmers and processes about 99% of all Icelandic wool. Icelandic farmers own 80% of the company.

Yesterday, the board of Ístex announced that it had decided to raise the price at which it buys wool from farmers by an average of over 48% for all processing categories. Bændablaðið interviewed Ístex CEO Sigurður Sævar Gunnarsson, who stated that the increase varied between categories of wool, with a greater increase in more highly-rated classes. This is the biggest increase in wool prices in the last 15 years.

“One of the reasons for these price increases is the good performance of Ístex in the first months of the year and, indeed, in the last quarters. We had a very difficult 18 months starting in the summer of 2019 with a relatively rapid decline in the sale of wool blankets, in addition to low wool prices, generally.”

Sigurður explained that the operational wheels “started to turn again” when Ístex added an evening shift to its knitting-yarn production in Mosfellsbær in the fall of 2021. Greater efficiency was achieved in terms of the equipment and sizes, together with the fact that prices rose. “So, the last two years have been quite busy for our people but, at the same time, rather rewarding,” Sigurður remarked.

As noted in the article, sales in the first six months of the year are approximately ISK 200 million ($1.5 million / €1.3 million) higher compared to the same period last year.

“Better prices than expected have been achieved for certain categories of wool … the prospects this year, therefore, look good, but on the other hand, we may be just one more serious malfunction from a difficult year,” the article quotes Sigurður as saying, who added that the favourable exchange in Iceland is contrary to the situation abroad, “where prices for raw wool are still low and have not fully recovered.”

Accommodating farmers

Other factors also affected the board’s decision to raise prices for farmers, according to Sigurður. “It felt right to accommodate farmers due to delays in the collection of wool in many parts of the country.”

“We’ve suffered serious malfunctions in our machinery, which delayed our washing process by more than a month. This meant that we were unable to receive more wool during the repairs. All equipment is now in order, and we are working hard to get all the wool to Blönduós as soon as possible. We at Ístex would like to thank farmers for their patience and apologise for the inconvenience caused during this difficult period.”

Sigurður observed that the proper categorisation of wool by farmers was key to increasing the value of wool. Over the years, most farmers had taken great pride in improving the quality of their wool, and those who had taken such steps were being better supported, compared, perhaps, to those who could stand to do even better.

Sigurður concluded by stating that Ístex’s biggest investment this year was a new spinning machine that was slated to arrive in the fall. “It’s being built in Italy and will suit the Icelandic wool very well.”

Record Sales of Icelandic Yarn in 2021

wool yarn

Sales of knitting yarn grew by 50% last year at Ístex, the company that processes about 99% of all Icelandic wool. Ístex is considering introducing night shifts at their factory to increase production. The company’s CEO hopes to invest more in the company in order to reach bigger markets in Asia, the United States, and Russia.

The year 2021 was a record year for Ístex both in revenue and profit, Viðskiptablaðið reports. The company’s revenue grew by 44% between years, to ISK 1.2 billion [$9.7 million, €8.5 million] last year. The company made a profit of ISK 93.4 million [$751,000, €661,000] last year, especially impressive compared to the year 2020, when Ístex reported losses of ISK 67.5 million [$543,000, €477,000]. In 2021, the company saw a 50% rise in sales of lopi knitting yarn.

Read More: Icelandic Wool Export Up 70% in Pandemic

Ístex CEO Sigurður Sævar Gunnarsson says last year’s sales of knitting yarn are likely a historical record for Iceland. More people have taken up their knitting needles in the pandemic, which has led to increased sales both in Iceland and abroad. “We expect continued demand despite the fact that the effects of the COVID pandemic are decreasing. In this light we can mention that after the banking collapse of 2008 there was a big increase in hand knitting, especially in Iceland, that really never decreased.”

Ístex has introduced evening shifts to its factory, but is still not managing to meet demand. The company is now considering introducing night shifts as well. Sigurður would like to see increased investment in the company so that it can pursue larger markets. “There are certain opportunities fr us now and we have to fish for them. There are certain markets where we haven’t been able to gain ground.” He particularly mentions the United States and Asia, though Russia is another market that is likely to grow quickly.