VIDEO: Center of Nation Wool buys from 1,700 sellers

BELLE FOURCHE, S.D. -- Center of the Nation Wool, Inc. is aptly named.

It's at the center of major producing areas, and at a geographical center if you count Alaska and Hawaii, says Larry Prager, chief executive officer since 1993.

Prager manages one of the four largest marketing wool warehouses in the U.S. -- probably the largest. Center of the Nation Wool deals with about 1,700 producers, mostly from four states --South Dakota, Montana, Wyoming, and North Dakota -- but also Colorado, Utah, Idaho, Nebraska. The company handles  50 to 75 percent of the wool produced in the states they trade in.

The company handles 5 million pounds of wool in its so-called "grease weight" -- about a fifth of the  25 million pounds of wool produced annually in the U.S.

More importantly, they  handle fully half of  the premium quality wool in the country. "We supply over half of the U.S. military requirements," Prager says. "That goes into dress military uniform cloth. That's been a mainstay of this market for a long time."

Well-positioned

The company initially incorporated in Alzada, Mont., in 1960, about 50 miles into Montana. Producers then wanted to "core test" their wool and deliver their own wool directly to markets rather than to smaller local commission buyers.

In 1984 the company incorporated in South Dakota. It's a private company with about 100 stockholders, most of whom were members of the original pool. They marketing their own wool, they would market for the entire region.

Center of the Nation sells to a company Chargeurs Wool Combing of Jamestown, S.C., -- the nation's only remaining combing company. Chargeurs scours, cards and combs the wool and sell it as  "top" -- a raw material -- to "spinner" companies that make it into yarn, which is then made into cloth.

The Upper Great Plains has three big things going for it -- great wool genetics, an open grassland environment as well a good tradition of wool preparation and management.

The Upper Great Plains states are a perfect fit for the  so-called fine wool sheep -- largely Rambouillet and Targhees. They produce wool of 22 micron diameter. "They're hearty, they don't need a lot of extra feed, can survive off sage brush and grass and most winters are not that severe," he says. Cattle or horses would starve to death in conditions that sheep do well in. Cattle need "live water" -- open water -- sheep can get by on dew or snow.

Center of the Nation Wool takes in wool at Belle Fourche and Billings warehouses. The "range lots"  are compressed bales or bags. The warehouse workers visually assess the wools, core-tests them for third party analysis at Yokum-McColl Wool Testing Laboratories, Inc.,  in Denver, Colo.

Yokum-McColl  analyzes for the average diameter of the wool fiber and percentage of clean wool. Ranchers are paid on the "clean wool component" which is 50 to 55 percent of the original weight, after dust, grease.hay chaff and burrs are cleaned  out.

"Our customers' requirements are pretty specific, for length, color, microns (diameter), depending on what they're trying to make," he says.

The middleman

Typically, Prager  can visually evaluate wool when it comes through the door. He has a pretty good idea what a good market match will be. "Once we have a price established, we negotiate on behalf of the ranchers," Prager says. There are times when the market isn't right and the company becomes a storage option. Wool typically is in the warehouse a month or two, but can be up two years.

The company does order-buying for certain customers, and cash buying smaller lots. There are few carryover stocks anywhere in the world and sheep numbers have declined worldwide. Prices of wool have been relatively high and stable for the past few years, now averaging about $2 a pound.

Wool is a textile fiber, competing with other fibers. In recent years it has been helped by a process called Superwash, which makes wool garments machine-washable without shrinking. It involves an acid which burns off some of the scales off  the wool fibers and coats them with a polymer so they don't interlock quite as much.  This reduces the so-called "felting" process, of shrinking. The Superwash-treated wool retains the fire-resistance, moisture-wicking and dyeing ability that the fabric is famous for.

"It's a minimal procedure but it makes a difference," Prager says. The procedure has been around for many years but became popular after Australians -- famous for their Merino wool -- made their 2008 Olympics uniforms from wool treated with it. The techniques were popularized premium "performance wear" fine-gauge knitwear. This has particularly benefitted the market for fine-gauge wool socks.

The wool industry has undergone consolidation

Wool's future

More than half of the lamb meat Americans eat come from Australia, which is a burden on U.S. lamb and wool producers. The U.S. produces less than 2 percent of the world's wool, while Australia produces a third of the world's wool.

There is only the one major combing mill left in the U.S.  That mill can handle only half of the wool produced in the country, so half of domestic wool is exported . China and India are primary export destinations.

Sheep producers are "hearty" but they are getting older and fewer, Prager says.

Some smaller flock pastures some smaller pastures are converted from sheep and lambing to developments or recreational use. Similarly, there is a general shortage of sheep shearing crews. All of the sheep need to be sheared in a matter of three months -- just before lambing and after overwintering. Today's shearers are faster and better-trained than they were in the past.

Regardless of the challenges, Prager says he's happy to be in the business and to serve it.

"What draws you to this industry is the producers themselves," he says. "They work hard. They take all of the risks of weather, markets, predators -- all of the issues they face every day. It's a privilege, I think, to have the responsibility to market their products."

Wool notes

• Coarser-type wool of 30 microns are produced by black-faced sheep. These typically require more warehouse sorting than what Center of the Nation Wool is set up for. Many of these wools are marketed through smaller companies like Groenewold Fur & Wool Co. at Forreston, Ill., or Mid States Wool of Columbus, Ohio.
• Organic trends haven't had much impact on the  wool industry, There are some people wanting to sell or buy it, but it is of relatively poor quality so far. Organic producers can't use chemicals to control parasites of sheep, or the cockleburs or burdock on the range that contaminate wool.
• The U.S. wool industry worries about the threat from "hair-cross" sheep that are typically in smaller flocks. These sheep (Katahdin, Jacob and Dorper) have hair that is shed, not shorn. Animal owners prefer not to have the shearing costs in order to concentrate on ethnic meat markets. The problem is the "cross-hair" genetics comingles with wool types and contaminates the wool supply.