Mid-States Wool Co-op Survives Transition in Wool Management and Marketing

By Ross McSwain, Special Correspondent

Since 1918, Mid-States Wool Growers Cooperative has been serving thousands of sheep producers over a multistate region of America. When the wool industry took an economic hit a few years ago with low prices and poor demand, the co-op had to seek ways to refinance its operations and streamline its services in order to meet the future needs of its 12,000 grower members.

The cooperative applied for and obtained a loan for operating capital from the National Livestock Producers Association. The loan is serviced through the credit division of United Producers Inc. in Columbus, Ohio.

“The loan allowed us to refinance the cooperative and provided much needed financing for our operations,” said Don Van Nostran, the co-op’s general manager located in Canal Winchester, Ohio.

Currently, Van Nostran said, the cooperative has two warehouse locations. The one in Ohio handles wool grown east of the Mississippi, and the Kansas warehouse facility handles wool coming from west of the Mississippi. Each location has two divisions - the wool department and the livestock supply division.

“While our cooperative was organized in 1918 for the purpose of marketing wool for our members, the supply divisions were added later to provide supplies to sheep producers throughout the country,” Van Nostran said.

“Currently, we market sheep supplies through two catalogs we print and mail as well as through our web site. About 90 percent of our supply business is done through mail order or telephone, 5 percent is done through the Internet and about 5 percent is from walk-in business at the warehouses.”

Livestock supplies offered include: electric shears and clippers, feeding and watering equipment, sheep handling, fitting and grooming supplies and equipment, docking, dehorning and castration equipment and fencing materials. Other items include clothing, home spinning equipment, blankets, pharmaceuticals and scales.

“The marketing of livestock supplies has provided the cooperative with cash flow during the recent time of depressed prices for wool and has allowed us to continue to operate our wool divisions,” Van Nostran observed.

A few years ago when wool prices took a serious slump worldwide, sheep producers in the Northwest started selling their animals. With reduced sheep numbers and fewer pounds of wool being sold in the United States, the co-op’s board of directors decided to close its warehouse facility in Belle Fourche, S.D., and consolidate its western operations with its Kansas facility. The Belle Fourche operation was closed in January 2002, Van Nostran said.

Van Nostran said the cooperative works with about 12,000 sheep producers in 22 states and markets about 4.6 million pounds of wool annually. The majority of the sheep producer members of the co-op have small flocks and will generally sell less than 350 pounds of wool annually.

“This means that no one producer has enough volume to attract bids on their individual clips,” Van Nostran said. “However, with the cooperative, producers can bring their wool to the co-op and we individually grade each fleece and group the fleeces into marketable 45,000 pound container units to offer to the mills both domestically and internationally. Individually, the producer has fewer options, but through the cooperative, we can offer an attractive package and producers can receive a fair price for what they produce.”

Van Nostran said the co-op has historically offered three methods of payment: cash, grade and yield, and consignment. With wool prices under such intense pressure the last few years and with many wools finding little or no demand in the marketplace, the co-op has been selling wool only on consignment with settlement after the wool has been sold and a market price established.

The wools that come into the cooperative’s two warehouses range from 20 micron to 34 micron with the majority ranging from 27-32 microns, Van Nostran said.

“With the number of producers that we work with, there are a number of different sheep breeds which makes for the wide variation in microns, lengths and styles of wool sold,” he explained.

The average size flock that the cooperative works with ranges from 30 to 40 head. However, the cooperative also handles large clips of wool, but very few of its producers have over 300 to 400 head.

Since the cooperative service covers such a large area - in fact, 22 states - Van Nostran said it requires some 150 handlers and shearers to collect the wool in their respective communities.

“When the wool accumulates, we have our trucks go to these handlers and pickup the wool for grading at the warehouse,” he said. The grading and packaging of the wool is perhaps the most modern in the industry. The recently installed automated grading system, especially designed by Integrated Technologies Group, brought increased production at lower costs using a computer terminal and automated controls to direct the system. The number of workers required per shift was reduced from six to four, and the amount of wool graded per shift was increased from a shift average of 8-10,000 pounds under the old system to 11-12,000 pounds using the new method. Van Nostran said the new system allowed an 88 percent increase in production per worker.

“We are very satisfied with the (new) system,” said Van Nostran. “It does everything we wanted it to do. We were looking to reduce labor costs and mechanize as much as possible. . . the system has enabled us to run the entire process with only two people if we want. It has minimized the amount of labor to perform all tasks.”

In addition to the new automated grading system, Mid-States also has made changes in wool packaging, Van Nostran noted.

After more than 100 years of packing wool at the farm or ranch in traditional jute bags, the cooperative started using a plastic film bag and pouches in 1999. U.S. woolen mills were demanding a change from the jute bags to improve the quality of the domestic clip. According to Stanley Strode, Mid-States Ohio warehouse wool manager, the world had been seeking answers to packing wool for decades trying to come up with a product that would be non-contaminating to the wool, yet strong enough to withstand handling of the bag from the shearing pen to the warehouse.

Strode said the new plastic bags and pouches are the same size as the jute bags currently being used. The plastic film bag is not like the plastic fiber-type bagging material used in feed sacks, which caused much contamination when used to pack wool, mohair and other fibers.

Van Nostran says the majority of the wool marketed by Mid-States Wool Growers Cooperative continues to be sold to the domestic market, but through the efforts of the American Sheep Industry Association and its affiliate, the American Wool Council, new markets for American wool are being developed overseas.

“During the past few years most wools have moved fairly well but the price has not been profitable to the warehouse or to the producer. However, 28-29 micron short wools under two inches in length have been accumulating for the last three years with no interest from any direction,” Van Nostran said.

In recent years, mohair production has shown an increase in some states that the cooperative serves and the co-op has made efforts to work with the mohair growers. However, Van Nostran notes that the co-op does not handle a large volume of mohair.

“Once the hair has been sorted, we send it to Texas to be marketed,” he said

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Ross McSwain lives in San Angelo, Texas. He has been a journalist for the past 40 years and was a farm and ranch editor for 25 of those years. Throughout his career he has worked very closely with the sheep and goat industry in the San Angelo area.