An analysis of the production and marketing practices of the wool industry in Lesotho

English: Lesotho is a small country with, apart from abundant water, very few significant natural resources. The countries' economy is mainly based on limited agriculture and manufacturing. Most of the labour force depends on subsistence agriculture, yet this sector only contributes 15% to the Gross Domestic Product (GDP). Wool is one of Lesotho's largest export commodities and (together with mohair) is the only agricultural earner of foreign capital. The continuous decline in national wool production during the past three decades, coupled with a drastic deterioration in the quality of the rangelands, has become a serious predicament for the Lesotho government. The competitiveness of the wool industry in Lesotho is in question, and wool farmers remain poor despite the export earnings of wool. The Lesotho government is also under pressure to privatise the shearing shed system, and it is seeking alternative solutions to substitute or increase the efficiency cif the present system. These factors and remedial actions to increase competitiveness have necessitated an analysis of the wool production system. This study forms part of a larger study focussing on the wool and mohair industries in Lesotho. The main objective of the study is to analyse the wool system in Lesotho, including the production, trade, and marketing processes of the industry and to recommend the necessary remedial actions. The problem conceptualisation method was used to analyse the research problem. Both deductive logic and inductive reasoning were used to analyse the data and to form conclusions. The study relies heavily on a comprehensive literature study for the gathering of secondary data. The Rapid Rural Appraisal (RRA) technique was used to obtain the necessary primary data, and the basic principles of action research were applied during the research. The study highlighted the lack of proper feeding, low reproduction rates, high mortality, and stock losses as the major reasons for low yields. Emphasis is placed on the importance to improve the quality of rangelands and to introduce efficient production systems. Also highlighted in the study is the crucial role of the shearing shed system and the need to privatise the shearing sheds through the establishment of producer-owned cooperatives. Computerisation and streamlining of the administration process during marketing should coincide with the privatisation process. The development of micro-cooperatives at the shearing sheds can also serve as a structure to bring services such as the availability of inputs closer to the producer. The development of a rural banking system supported by microcooperatives as a basis should also be exploited. The present trade and marketing system through the South African marketing structures should be treasured. The system of licensed traders, though, should be liberalised because of its monopolistic nature and the lack of law enforcement and proper policing of the system. An empirical estimation by means of a policy analysis matrix indicates that the wool system in Lesotho is not competitive and efficient at all. It shows that the economy is losing foreign exchange from local production because the opportunity cost of its domestic resources is more than the foreign exchange it gains. This is in total contrast to what the industry and government believe since they regard wool production as the flagship of all the agricultural systems in the country. The study, however, shows that an increase of 15% in wool production output is sufficient enough to ensure competitiveness. The study therefore concluded that the wool system, as a vital supplier of income at household level in the rural areas, should increase productivity at the production level to increase its competitiveness.