Set in the heart of Western Australia’s Wheatbelt region, Prospect Pastoral is a regenerative wool and wheat farm that stands out against the harsh, brittle landscape in which it sits. Bordered by arid farmland that bakes under the state’s expansive blue skies, Prospect Pastoral’s tree-lined paddocks are home to a diverse array of birds and insects that live alongside wild kangaroo, emus and, of course, 7,000 merino sheep producing some of the country’s finest grade wool. It’s a testament to regenerative agriculture, but challenges are mounting.
Australian wool is globally respected, making up a quarter of the world’s supply. But skyrocketing costs, extended periods of drought and low commodity prices have plunged the industry into distress. Many farmers are decreasing the size of their flocks or leaving the industry altogether. In 2024, the country produced just 279 million kilogrammes of wool, according to the Australian Wool Production Forecasting Committee — the lowest production volume in 100 years. Wool exports fell from AU $3.8 billion in 2017/18 to $2.8 billion in 2023/24.
Set against this challenging backdrop, an increasingly vocal community of regenerative wool producers is reimagining the system, focusing on small-scale production and emphasising ecological and animal welfare. They’re bypassing the traditional wool value chain to build direct relationships with global fashion brands, seeing significant environmental — and promising financial — returns in the process.
Regenerative farming is generally characterised by a rejection of conventional industrial agricultural practices, like the use of pesticides, fertilisers and insecticides, in favour of homemade composts that support nutrient-dense soils and microbially diverse crops. The idea is to regenerate the soil health, allowing it to capture more carbon emissions and increasing weather resilience. In Australia, regenerative farmers say they embrace the traditional teachings and systems of the country’s Indigenous communities, who have practised these intuitive and symbiotic agricultural techniques for thousands of years.
“When it’s done well, regenerative farming draws carbon out of the atmosphere, stimulates condensation of that carbon in the soil, as well as the soil biology and other ecology above ground,” explains Charles Massy, a New South Wales wool grower, author and leader in the country’s regenerative agricultural movement since the late 1990s. Proponents also say regeneratively farmed sheep have a more varied diet, increasing the amino acids in their hair follicles and resulting in higher quality, softer wool. With healthier and happier sheep producing superior wool, regenerative farmers are keen to educate and inspire more conventional farms to adopt these practices.
But there isn’t a one-size-fits-all system for regenerative agriculture — every farm requires a constantly evolving approach that responds to their unique climate and landscape. It takes decades of trial and error, requiring a radical mindset shift that few cash-strapped farmers feel willing or able to try. In order to transition to regenerative, farmers often have to reduce their flock sizes, invest in certifications and find new markets that understand the value of regeneratively produced wool. This small subset of a deeply entrenched industry faces no shortage of hurdles, including old-fashioned financial systems that don’t yet recognise or reward farms for their natural capital, and difficulty negotiating price premiums for what they believe is a superior merino fibre to most on the market.
Despite this, Australia’s regenerative farmers remain optimistic and steadfast in their belief in the ecological benefits of their work. “While I don’t yet see a lot of change in the farmers of my generation, conversations I’ve had with younger farmers have given me hope for the future,” says farmer Nan Bray, who has 550 Saxon merino sheep at White Gum Wool in Oatlands, Tasmania. “Many of them understand the stakes facing the industry, and are committed to finding better, more sustainable ways to farm.”
Securing a premium price
There are many actors in the wool value chain, from brokers and private buyers, to exporters and processors that blend, scour, card and spin the wool into yarns ready for dyeing and knitting. Farmers in other countries can struggle to sell their wool at a high enough price to offset costs, but Australian wool farmers tend to produce merino wool, which trades at a premium worldwide. When it leaves the farm in bales, wool that isn’t sold directly to global fibre suppliers goes to auctions around the country. While wool certified by the Responsible Wool Standard (RWS), Woolmark and other industry bodies receives a premium, this is also subject to fluctuations. “The price is highly variable week to week, let alone year to year, and is driven by the demand out of China,” says Bray. China received 82 per cent of all Australian wool in 2023, according to industry non-profit Australian Wool Innovation.
Massy’s daughter and co-manager Tanya Massy says their 5,000-acre family farm in the Monaro region of NSW received a 25 per cent premium over regular merino wool in 2024. This year, that premium has fallen to 20 per cent. “We’re lamb shearing at the moment, and the price that we get for that clip might just cover the cost of shearing,” she adds. “We really value that extra buffer, but it doesn’t value the depths of the genetics, the ecological, carbon and biodiversity benefits of what we’re providing, or the animal welfare aspects.”
The farmers I speak to have no visibility of how profits are divided up along the supply chain, but several express an interest in building direct relationships with brands, prompted by the increasing volatility of prices and premiums. Farmers say they want to have greater transparency of their product from fibre to finished garment, securing a greater share of the profit for their efforts and ideally passing savings on to customers.
Bray sells half of her annual wool clip to New York brand Another Tomorrow, and while her wool is RWS certified, she believes it is this relationship — and her personal animal welfare commitments — that have resulted in the premium she receives (between 1.5x and 1.75x the typical auction price range). “The most critical thing is for my customers to look at me and know that I’m the person they’re developing that trust with, and it has served me well,” she says.
Unlocking financing for regenerative wool
Transitioning to regenerative agriculture can be expensive, and even experienced farmers often struggle to identify finance partners that recognise and value ecological returns as highly as financial returns.
Farming for the Future, the flagship programme of the philanthropic Macdoch Foundation, released one of the largest global studies on natural capital in 2024, working with 130 Australian farmers to understand how different ecosystems like forests, woodlands, orchards and pastures can increase farm resilience and profitability in the long run. The report’s ambition was to provide farmers with data-backed evidence that they could take to secure loans. But farmers say banks are still hesitant to lend millions of dollars for the purchase and regeneration of land, partly because it doesn’t produce financial returns in typical repayment structures.
“Conventional forms of finance aren’t fit for purpose to work with regenerative businesses that run on ecological timelines,” says Tanya. “If you have to meet interest rates month in, month out, regardless of the season, that just incentivises the productivist mindset. It doesn’t enable ecological stewardship.” (This includes conservation and sustainable land management practices that seek to strengthen and protect the resilience of landscapes.)
Tanya says an example of how to do it differently is Steward, a US financial institution built for regenerative agriculture, which registered the first loan in Australia last year. “The loan structure enables farmers to pause repayments if a flood comes through, for example,” she explains. “The financial return piece that we’re looking at is predicated on soil, carbon and biodiversity credits.”
At Prospect Pastoral in Western Australia, Di and Ian Haggerty have gradually expanded from 1,650 to 65,000 acres over the last 30 years, buying up and regenerating local farms in poor condition. They sell their regenerative wool to Stella McCartney through Nativa, a branch of French manufacturing group Chargeurs that specialises in traceable natural materials.
The Haggertys have been vocal advocates for regenerative farming and have ambitions to drive systemic change by unlocking financing opportunities. In theory, these early-stage efforts would not only ease the transition to regenerative practices but also disrupt the flawed carbon credit system that has led to people planting new trees without considering biodiversity. For the last 10 years, the Haggertys have been measuring 140 different ecological and social impacts on their farm, along with 24 other regenerative farmers around the country, to quantify the financial value of their work. Soon, they’ll be launching a platform through which organisations and individual citizens can invest in these farms to support their ecological development. “We’re looking at changing the financial system so farmers can get better access to money, rather than farmland going to monoculture trees or industrial, chemical-driven agriculture,” says Ian. “Let’s get a proportion of financing into the right thing — rebuilding the planet that we’re living on, that’s been saving us and supplying everything for us. And guess what? It’ll be the best investment they have ever made.”
The role of brands
To get brands on board and justify financing, farmers need to prove the benefits of regenerative agriculture, but the science is nascent and certifications don’t accurately capture the complex ecological impacts on farms.
Despite this, the farmers recognise the importance of certifications for the industry. Di says farms need more assistance to meet certification and data measurement requirements from brands. “All those measures come at the cost of the farmer, and they don’t need another thing hanging over their heads, so it needs to become more supportive,” she says. “We’re happy to have all the measurements being done to understand what’s going on, but we can’t put that cost back on the farmer.”
Tanya echoes the sentiment that fashion brands should play a bigger role in securing the future of regenerative wool. “Brands that are sourcing from farmers have a huge role to play in incentivising ecological stewardship through premium payments, but they can also partner on some of the critical work that needs to happen on farms, whether it’s helping to fund revegetation work or some of the ecological monitoring that’s increasingly required by supply chain legislation,” she says. “If the fashion industry wants to be able to continue to source regenerative wool, it really needs to step in and partner with us to make sure we can survive.” There are early examples of brands trialling this: in neighbouring New Zealand, knitwear brand Sheep Inc reinvests 3 per cent of its profits into regenerative farms through its Radical Farming Fund, while performance brand Icebreaker has the Growers Club, offering long-term 10-year contracts to 70 wool farms to ensure a steady demand.
For Jane Kellock, who runs Klevale Farm across 1,000 hectares in South Australia with her husband and four children, data capture and measurement on the farm provides essential evidence to support the regenerative work they’re doing. They have 4,000 merino sheep and sell to Icebreaker and Japanese wool company Nikke Textile through NZ Merino, which sells, certifies and promotes wool from New Zealand and Australia. “It’s a benefit for us as producers to know exactly what’s happening in our business,” says Kellock, whose wool is certified by RWS, the Schneider Group’s Authentico scheme and NZ Merino’s ZQ programme. “I really see major benefits in what we’re doing, and I hope people that buy and wear our wool realise what has gone into creating that wool.”
That said, several farmers I’ve met have expressed hesitation to use the term ‘regenerative’, concerned that it creates a polarisation between them and conventional farmers. They acknowledge that the financial pressures farmers are facing to make ends meet mean increased pressure on their land and animals to produce more — a vicious cycle that prevents many from experimenting with unconventional farming techniques. “I haven’t met a farmer who deliberately goes out there to make their country worse or treat the animal badly for the sake of it,” says Kellock. “We have to find alternative ways of doing things that keep us being productive because we’re providing fibre for the world. We have to do it in the best way that we possibly can.”
Cross-sector collaboration and education could help to bring more farmers along for the regenerative journey, says Tanya. “Where I see meaningful opportunities is when you bring farms together, and there’s a range of peer learning groups happening at local, regional and national levels. We all care about the future of this community, we want our family farms to survive, and we want healthy people and healthy animals.”
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