The wool and mohair industries have been in a period of radical transition over the last few years. A number of issues have adversely impacted wool and mohair producers. These include loss of milling infrastructure, world economic events that have severely damaged export markets, increasing imports of lamb, and severe drought. This analysis builds on an econometric model of the sheep and angora goat industries. The models estimate and project supply, demand, and price. Projections are made over the 2001-2005 period. Simulation modeling techniques are used to develop probabilities of outcomes. That allows for the development of average government costs and probabilities of costs in each year. Loan rates are developed using cotton as the model. The current cotton base loan rate of $0.519 per pound is evaluated relative to estimates of cotton variable costs of production. That relative level of support is maintained relative to costs of production for wool and mohair. Because wool and mohair have another product (meat), typical returns for meat are subtracted out of costs to develop a wool and mohair production cost.


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