TEXAS AGRICULTURAL EXPERIMENT STATIQN
H. D. LEWIS. Director, College Station, Texas

[Ml/din 74o

i The TEXAS AGRICULTURAL AND IVIECHANICAL COLLEGE SYSTEM
GIBB GILCHRIST, Chancellor

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nnnn u

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EACH DOT REPRESENTS FIFTY
THOUSAND POUNDS OF WOOL

n».

Figure 1. W001 production in Texas, 1950.

  

Digest

This bulletin gives the results 0f a study made recently on
the marketing of Texas wool through local warehouses.

Ninety Warehouses scattered over the Texas sheep country
handle about 95 percent of all Texas wool. Information given
by owners and operators of 88 of these warehouses formed the
basis for this report.

Texas was the first state to establish local wool and mohair
marketing facilities, beginning about 1870. One or more ware-
houses are now located in practically every county seat on the
Edwards Plateau, the main wool-producing area.

Providing a center for the concentration of wool clips is the
principal service rendered growers by the Warehouses. This
makes wool available for inspection in sufficient quantity to
attract buyers. The average storage space in Texas warehouses
is about 1.5 million pounds. The largest warehouses have storage
space for 8 to 10 million pounds.

Warehouses also provide many other services for wool grow-
ers, including the making of all kinds of contacts and the sale
of ranch supplies. Some make loans on wool and finance general
ranch operations. In fact, a warehouse is a good deal like a town
business ofiice for its patrons.

Most wool moves into the warehouse in April and May, since
about 75 percent is 12-months wool. The next largest movement
is in September and October and is the results of two shearings
a year practiced by many growers. a

Operating procedures are similar in all wool warehouses.

Wool is normally sold from the warehouse by private treaty
or through sealed bids. The warehouse operator acts as the agent
of the wool owner in closing the sale. Wool buyers are either
representatives of Eastern dealers and brokers, order buyers,
mill buyers or independent buyers. About one-third of the ware-
houses buy wool direct from the grower. A few warehouses
purchase large amounts each year, both independently and on
order. -

Varying tonnages of wool are contracted by buyers each year
prior to shearing. About one-fourth of the 1949 Texas clip was

‘ sold in this manner.

Better preparation of wool for market is encouraged by several
warehouse managers. This should result in a worthwhile increase
in selling price over similar wool improperly prepared.

CONTENTS

   
 
   
  
   
  
   
   
  
  
  
  
  

Pi
Digest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Warehouse Organization and Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . ..O‘

Development of the Wool Marketing System . . . . . . . . . . . . . . . . . . . . 

Warehouse Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..:

Warehouse Size and Volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. i

Incorporation of Wool Warehouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .;

Licensed and Bonded Public Warehouses . . . . . . . . . . . . . . . . . . . . . . . 

Warehouse Size in Relation to Income . . . . . . . . . . . . . . . . . . . . . . . . . 

Warehouse Insurance and Construction . . . . . . . . . . . . . . . . . . . . . ..

Warehouse Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

Types of Wool Handled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Preparation of Wool for Market  . . . . . . . . . . . . . . . . . . . . . . . . 

Handling Wool in the Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . .  I

Weighing In; and Out . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Stacking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _

Displaying Wool . . . . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . . . . . .. I

Grading Texas Wool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

Wool Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

Methods of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

Contracting Wool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Types of Buyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Buying Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. I

Loading and Shipping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

Warehouse Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. W

Problems of the Warehousing Industry . . . . . . . . . . . . . . . . . . . . . . ..

Summary andi Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. F"

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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a 632-1051 

 

BULLETIN 740 OCTOBER 1951

 71/00! llama?!» 7easwl
Wcwe/awua

Fred R. Campbell, L. P. Gabbard and Sfanley P. Davis*

N PRODUCING 53 million pounds of shorn wool in 1950, 0r
slightly more than one-fifth of the U. S. output, Texas re-
mains the largest producer of wool.

The organization, practices and operations of the Wool mar-
keting system are important to the industry. Information on
local producer wool markets is meager. This bulletin gives an
overall picture of the Texas wool marketing system and brings
together information which should be helpful to producers and
Warehousemen.

Over 95 percent of producer sales of wool are made at local
warehouses. The successful marketing of Texas WOOl depends
not only on the ability of ranchmen to produce quality wool,
but also on the efficiency of wool warehouse operations.

WAREHOUSE ORGANIZATION AND FUNCTIONS

There are about 90 wool and mohair warehouses scattered
throughout the sheep-raising area of Texas, which is centered
largely on the Edwards Plateau in Southwest Texas. It has been
estimated that over 95 percent of all Texas wool is handled by
these warehouses. A small tonnage is sold and marketed directly
from the ranches.

Owners or operators of 88 warehouses were contacted to obtain
as accurate a picture of the marketing of Texas wool as possible.
Information gathered through these contacts furnished the basis
for this report.

Development of the Wool Marketing System

Prior to the Civil War there were no permanent facilities in
Texas for handling wool. Wool was moved by boat and wagon
freight and sold on out-of-state markets. This was very unsatis-
factory to the wool grower for he knew little about the market
which was so far from home.

T. C. Frost of San Antonio was the first person in Texas to

a try storing wool locally. He opened a storage house shortly after

the Civil War. His enterprise was so successful that other per-

*Respectively, formerly technical assistant, Department of Agricultural
Economics and Sociology, now county agricultural agent of Sterling county;
head, Department of Agricultural Economics and Sociology, College Sta-
tlion, Texas; and wool and mohair technician, Bluebonnet Farm, McGregor,

exas.

    
   
 
   
  
  
  
  
   
  
  
  
  
   
  
   

6 ' BULLETIN 740, TEXAS AGRICULTURAL EXPERIMENT STATION

sons opened similar firms, usually operating a bank in conjuf
tion with the wool warehouse. Others started storing wool
small cost to the growers to attract more business to th
primary enterprise, which varied from the handling of fe
grain and produce to hardware and groceries.   

The warehouse business grew rapidly because of the needf
local storage for the expanding wool production. Texas beca
the first among the wool-growing states to establish local ow
marketing facilities. Today one or more warehouses are foul
in practically every county seat in the wool producing arxi
Figure 2 shows the distribution of the major wool warehou
in Texas. *

t

Warehouse Services 

The principal purpose served by the wool warehouse in Te I
is to provide a center for concentrating wool. Safely stored a,
insured, it is available for inspection in sufficient quantity f
attract buyers. In this manner it is possible to offer wool 
carload lots, which is usually the minimum tonnage that a buy,
will ship. Most wool growers in Texas produce less than a c,
load of wool annually; therefore, a buyer trying to make up;

a" f

o wmsnousss Nouns: _I'_.l-~"_
m THE sruov — .
o wARsHousss mrmuom  '
m THE swov

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Figure 2. Location anddistribution of wool and mohair warehouses, 

q..
*.

 w-nwsv___-....w,_wwr..wwwvm_ ._ M.-. . ., . . .

MARKETING WOOL THROUGH TEXAS WAREHOUSES 7

carload of similar type wool would be out greater expense if he
had to visit each ranch to inspect clips. Being able to inspect
and obtain WOOl from concentration points such as warehouses
also should increase the price paid to the grower.

In addition to wool storage, the Warehouses in Texas generally
provide other services to their customers. Practically all wool
Warehouses also handle mohair; in fact, some warehouses handle
a larger tonnage of mohair than wool, depending on which prod-
uct is most extensively grown in the area. Most warehouses sell
feed, salt, ranch supplies and stock medicines. Ranchmen often
visit warehouses seeking advice on all ranching problems. In
some areas, warehouses provide, Without charge or at cost, such
services as locating shearing crews, supervising shearing opera-
tions, hauling wool from the ranch to the Warehouse, supplying
price information to the growers, furnishing wool graders, and
the culling of sheep and goat flocks. Some warehousemen sponsor
social functions such as dances and barbecues, and assist 4-H
Clubs and FFA Chapters in wool and mohair and sheep and goat
judging contests.

Seventy-four warehouses gave information on their status as
lending agencies. Twenty-six warehouses make short-term loans
on wool; eight also finance general ranch operations, including
the purchase of livestock.

Warehouse Size and Volume

The largest warehouses, based on volume handled, are west
and southwest of McCulloch county. Warehouses north, east and
south of McCulloch county, with a few exceptions, are smaller.
In areas where flocks are large, warehouses generally have
heavier volume.

Texas warehouses have regular storage space for approxi-
mately 130 million pounds of wool. As was proved during the
Commodity Credit Corporation wool purchase program, addi-
tional storage space can be made available. Of 61 warehouses
reporting on capacity, 35 had storage space of over a million
pounds each, with the largest reporting storage space of 8 to 10
million pounds. The average storage capacity is about 1.5 million
pounds.

This survey indicates that 14 warehouses in Texas handle
about 50 percent of the annual Texas clip. Six of these 14 ware-
houses grade 75 percent of all wool graded in Texas; the amount
graded by each varies from a negligible quantity to one million
pounds.

Figure 3 shows the normal volume of wool handled by 72
individual warehouses, as compared with their respective capaci-
ties. Some warehouses handle more wool annually than they can
store at one time; this is due to a rapid turnover. Most firms
show a capacity larger than their volume; in many cases, this
space is used to store mohair, feed and ranch supplies.

s BULLETIN 740, TEXAS AGRICULTURAL EXPERIMENT STATION 
s
i
a l
mou- i}
SAND
Poums ‘A
4500 l l
4000
3500 — , s?
5000 E 
2500 
2000 " ~ — —
E E l
I500 z 5
|000 
500-—~ 
I l 

Figure 3. Volume and capacity of 72 wool warehouses. The solidifi-

indicates the volume normally handled. The broken bar indicates the sto 

capacity at a given time.

MARKETING WOOL THROUGH TEXAS WAREHOUSES 9

Incorporation of Wool Warehouses

Of 75 Warehouses reporting, 24 are incorporated and 51 unin-
corporated. Four of these Warehouses were incorporated under
the Cooperative Marketing Act of Texas, and the other 20 under
general corporation laws. Approximately 85 percent of the stock-
holders of the incorporated warehouses are wool growers. The
role of growers in ownership of warehouses is shown in Table
1. Fourteen of the incorporated Warehouses are owned and con-
trolled largely by wool growers. These grower-controlled firms
operating on a highly competitive basis, along with others which
are unincorporated, should result in better service to all wool
growers.

Table 1. Ownership of incorporated wool warehouses

Average Stockholders
Warehouses stockholders who are growers
Number Number l Percent
7 . . . . . . . . . . . . . . . . . . . . . . . 3

2 . . . . . . . . . . . . . . . . . . . . . . . 15 1-49

8 . . . . . . . . . . . . . . . . . . . . . . . 244 49-99

6 . . . . . . . . . . . . . . . . . . . . . . . 89 100

1 _ . . . . . . . . . . . . . . . . . . . . . . . Unknown Unknown

Licensed and Bonded Public Warehouses

A private wool warehouse may qualify as a public warehouse
under either the state or federal law, or both. Under the state
law, a certificate for a public warehouseman is issued by the
county clerk of the county in which the warehouse is located
upon filing an application and posting a bond in the amount of
$5,000. The surety for such bond may be either two or more
persons or an insurance company licensed to operate in Texas.

_ Warehouses are under the supervision of the State Commissioner
' of Agriculture.

To qualify for a license under the United States Warehouse
Act, a warehouseman must furnish a bond of $15 for each 1,000

 pounds of wool storage capacity of the warehouse. The bond
r must be for at least $5,000 but need not be over $50,000. In
' addition, the warehouseman must also have net assets of $15

for each 1,000 pounds of storage capacity liable for the payment
of indebtedness against the Warehouse. Such net assets must

A be not less than $5,000 and need not be over $100,000. Any

deficiency in net assets may be made up by a corresponding
increase 1n the amount of the bond.

The same warehouse may qualify under both state and federal
laws, for whatever prestige this might afford. In that event, the

 

  
 
  
   
  
     
   
   
 
 
    
  
 
 
    
 
   
 
 
 
   
  
  
  

10 BULLETIN 740, TEXAS AGRICULTURAL EXPERIMENT STATION
Warehouse is required to meet the federal requirements, ev
though these standards are higher than those under the sta
law. a ' . 
Private warehouses are distinguished from public warehou.
in that they do not store wool for the public. These firms m
operate in Texas Without license and bond. Should they des:
to become public Warehouses and issue negotiable receipts, 5‘
must operate under license and bond. The private warehou,
now operating in Texas are mostly small ones which purch
Wool directly from the growers. g
The wool produced from 1944 to 1947 was purchased larg
by the United States government through the Commodity Cre, a
Corporation. Texas wool was stored for the government by:
large number of local warehouses. One of the necessary requ' ‘
ments to become a storing agency for government-owned wf
Was that the firm be bonded. After the expiration of this pup
chase program, the majority of the newly-bonded warehous,
kept their bonds in effect, with the result that more wool Wart
houses are now operating under either state or federal regu ._
tions. 5
Warehouse Size in Relation to Income "

Table 2 was compiled from information obtained from Wa a?
house operators. It shows to What extent warehouse owne
depend on Wool for their income. There is a direct relationshf
between the volume of wool handled and the percent of 11'
income from Wool. Firms handling less than one million poun
of wool annually generally depend on the sale of commoditi
other than Wool for more than 50 percent of their net inco 
These smaller warehouses are not confined to any one locali
but are scattered throughout the wool-growing area. ‘-

Table 2. Size of warehouse relative to income from wool Q5

Net income Approximate volu
Warehouses from wool handled annually»

Number Percent 1,000 Pounds 
11 .' . . . . . . . . . . . . . . . . . . . . . . 0—24 675,000 

18 . . . . . . . . . . . . . . . . . . . . . . . 25-49 930 .000
12 . . . . . . . . . . . . . . . . . . . . . . . 50-74 ' 1 ,095 ,000
13 . . . . . . . . . . . . . . . . . . . . . . . 75-100 1 ,256 ,000

Warehouse Insurance and Construction

Seventy-one Warehouses reported on the type of insuran
carried on Wool. Forty-five were fully covered and 26 were p 
tially covered. Those reporting full coverage generally carry f!
and extended coverage policies. Others reported fire, theft, tra 
portation, hail, Windstorm and public liability coverage. Wool
usually insured from the time it enters the warehouse until A
is removed. In a few cases, however, Wool is insured from ..;

MARKETING WOOL THROUGH TEXAS WAREHOUSES 11

time it leaves the ranch until delivered or removed from the
warehouse. The type of policy usually carried is a reporting type
form. Warehousemen take daily inventory of wool stocks and
report these either on a weekly or monthly basis. Others have
a “blanket” policy and report only when wool is moved in or
out of the warehouse.

Very few fires have occurred in Texas Warehouses. When
wool burns, it burns slowly or smoulders. In the event of fire,
warehousemen report that the major damage is not from the
fire itself but from the water or chemicals used to extinguish it.

The buildings in which wool is stored in Texas are mostly of
fireproof construction. Some were constructed of both lumber
and corrugated iron. Of 69 warehouses reporting, 50 were made
of masonry, 17 of metal and 2 of lumber.

WAREHOUSE OPERATION
Types of Wool Handled

The first wool enters the warehouse early in the year as the
tagging or crutching season gets underway. This operation re-
moves the wool from around the tail and udder and reduces the
possibilities of infection and screwworms following lambing
and during the suckling period. Such wool, known as clippings,
is usually stained, often contains dunglocks and is generally
inferior to other shorn wool.

Since ewes in Texas lamb mainly during January, February
and March, they are tagged during the months just previous to
lambing and the wool moves directly into the warehouse. There
is usually a good demand for clippings, because they are sold at
a low price and when reworked yield some very good wool. If
the sheep have been in good condition, there usually are few
dunglocks and the clippings yield a fairly high percentage of
desirable wool.

There is very little seasonal variation in shearing time in
Texas. Most warehousemen report April and May as their heavi-
est spring months with some extension into March and June.
None reported receiving a sizable quantity before March or after
June, except in the fall shearing section.

Most reports indicate that early shorn wool shrinks less than
wool shorn in hotter weather. The reason given for this is that
sheep sweat more in hot weather, secreting more wool grease
which picks up vegetable matter and dirt.

Fall shearing is limited to a rather definite region of the Texas
sheep country. A line drawn around the counties of Presidio,
Pecos, Upton, Irion, Sutton, Kimble, Gillespie, Kendall, Bandera,
Uvalde, Val Verde, Terrell and Brewster encircles the area in
which fall shearing is practiced. All the range land in this area
is rough, hilly and rocky, and contains quite a lot of brush, some
of which is particularly bothersome to sheep in long fleece.

  
 
 
  
 
  
     
 
  
  
 
 
  
  
   
  
 
 
  
 
 
  
 
  
   
   
  
 
  
   
  
  
 
 
 
  
 
  

12 BULLETIN 740, TEXAS AGRICULTURAL EXPERIMENT STATION

Fall shearing gets underway in early September and con,
tinues well into October. Warehousemen gave the followin
reasons for shearing twice a year: sheep do better in hot count 
when shorn twice a year; sheep are less entangled in brush i
annual clip is slightly heavier; necessity of tagging is eliminate
and clips bring cash to the producer twice each year. .,

Some growers shear twice a year because of their financia
condition or because sometimes there is a good demand f0!
short wool. 

Semi-annual shearing, however, has decreased during the pas,
60 years from an estimated 40 percent to 25 percent of the to =  l
Texas clip. Disadvantages stated for two shearings a year are‘-
the increase in yield is insufficient to pay for the decrease
market value of wool and shearing costs are roughly doubl
with fall and spring shearing. I

Fall wool (4 to 5-months growth) is termed short wool but i
grouped separately from the 8-months wool which is shorn in?
the spring. The market value of 12-months wool is slightly mor'
than for 8-months, and considerably more than for 4-months3
wool. 
Another type of fall wool in Texas is called fall 12-months
wool. The total amount of this wool is small but worthy ofi
mention. On the large, brush-covered ranges of Southwest Texas
where sheep are shorn twice a year, some are missed during the
spring round-up but are caught and shorn in the fall. This wool,;
though similar in length to spring-shorn 12-months wool, is‘
usually of poorer quality because of the greater shrink and;
tendency to be tender. It was estimated by three Texas buyers
that approximately 30 percent of this wool is tender. 

Another type of wool moves into the warehouse all during the
year. In Texas it is commonly called “dead” and “pulled” wool“
but the wool trade generally term it “murrain” and “dead” woo
respectively. Murrain is the wool from a decomposed carcas
while dead wool has been pulled from a sheep shortly after death,

Shearing board sweepings, called “tags,” fall into the class 0
inferior wool. It, together with murrain and dead wool, sells a
a discount because of its poor quality.



Preparation of Wool for Market

About 97 percent of the wool is received by the warehous
in regular wool bags and 3 percent in other containers generall
termed “pockets.” Feed sacks are most commonly used to ba
small clips or any off-type wool which the grower desires t
sack separately. On the eastern edge of the sheep country wher
flocks are small, growers may bag their entire clip in these bag
rather than go to the expense of buying wool sacks.

The regular Texas wool bag is 6 feet long, 40 inches wide an
weighs about 3 pounds. Packed, it usually weighs from 140 t 
250 pounds, depending on how tightly the wool is packed and =1
what the shrinkage is. The average weight is about 190 pound

wwy-w-w- . w" w. X ,"‘lY’"~lvv-vw.vv- 'Vv\'r\</~ w .

 

MARKETING WOOL THROUGH TEXAS WAREHOUSES 13

The most common method of packing is to place from 20 to 30
fleeces in the bag in layers of four each. This makes a heavy,
round bag. The most attractive bag is packed flat; it contains
from 14 to 20 fleeces in layers of 2 each (Figure 4). When the
bag seams are ripped, the fleeces are neatly presented, denoting
a carefully prepared clip (Figure 5). Before bagging, the stained
locks from each fleece should be removed and packed separately.
This, too, adds much to the appearance of the clip. i

In areas where fall shearing is done, short wool is not tied
before bagging. About one million pounds of 12-months wool
also are not tied in these areas.

Where flocks are larger, wool generally is better prepared for
market. Owners of a few head of sheep seldom go to much trou-
ble in preparing their clips. It is quite common in small clips to
find all classes of fleeces and off-types in the same bag. On the
other hand, progressive growers take pride in doing a good job
of preparing their product for market. Shearing crews are super-
vised carefully and discouraged from making second cuts through
the fibers. Shearing boards are kept clean and tags are sacked

Figure 4. Flat and round bags of wool.

   

BULLETIN 740, TEXAS AGRICULTURAL EXPERIMENT STATION

  
  
   
  
   
 
 
 
 
  
  
  
  
  
 
  
  

   

Figure 5. W001 bags opened for inspection.
separately. Yearling, lamb, ram, ewe, fine, medium and blac
fleeces are packed in separate bags. The old practice of puttini
extraneous material in wool bags is discouraged by warehouse-é
men and is severely discounted by buyers. For men who rais.
sheep year after year, it is profitable to offer for sale attractiv 
carefully prepared wool. p y

Warehousemen reported that some growers mix their mediu
and fine wool, hoping that it will escape detection by the buye
Seldom, however, do these mixturesgo unnoticed. Occasionally;
though, when the market is extremely active, as in 1949 1A7
1950, buyers may purchase these mixed lots with little or n,
discount. However, the chances are that the buyer knows Wha 
he is buying. During an inactive market, such a practice usuall
results in a sharp discount. a

Although carefully prepared wool does not always receive th
premium it should under present Texas marketing condition
it will be the first sold during an inactive market.

Handling Wool in the Warehouse
Weighing In and Out

When a clip enters the warehouse, it is weighed and each ba
is given a lot and bag number. The lot number is placed on t 
bag to identify the grower. The weight of each bag is placed i‘
a ledger along with the bag number. These weights are not use
as sale weights but are used to credit each owner with th '
amount of wool delivered. When sold, the wool is reweigh
Seldom are these weights the same, due to the tendency of wt
to absorb or lose moisture, depending on atmospheric condition A
When wool is shorn during damp weather and stored and sol
during a dry period, it may lose several pounds per bag. i‘

MARKETING WOOL THROUGH TEXAS WAREHOUSES 15

Stacking

After the bags are Weighed and marked, they are stacked by
lots in stanchions. Most houses have a WOOl “stacker”—-a home-
made or custom-made device which hoists bags up to the desired
height. Because the top of the bag is usually more loosely packed
than the bottom, bag ends are alternated (Figure 6). Some Ware-

Figure 6. Stacked bags of Wool.

  
  
  
 
  
   
  
  
  
 
  
   
  
  
  
  
 
   
 
 
 
  
 
    
    
  
 
 
 
   
 
 

16 BULLETIN 740, TEXAS AGRICULTURAL EXPERIMENT STATION

housemen put small lots in one section of the warehouse, a
others stack according to lot numbers, shrink, class or len,
of wool. All Warehousemen try to stack wool so any desired “
is easily accessible. ‘

Displaying Wool

Sample bags are taken from each lot and opened for buy
inspection. From 5 to 10 percent of each lot i's shown, but if
buyer cares to inspect the clip or lot more thoroughly, it
usually his privilege to do so. .-

Wool is generally shown either in lines or individual cli
depending on the warehouse policy and upon the grower’s  ,
mands. Some operators line their Wools up according to shrin,
age, but for the most part, wool is lined according to stap,
length. Of the total Texas clip, some 12 percent of the wool
put into lines of one kind or another. The most commonly use
divisions are:

Line 1—Staple or Combing Wool __

Line 2—French Combing Wool .

Line 3-Clothing Wool (including spring 8-months and f“
4-months) ;.

These lines are made for sales convenience as they make a5
spection easier. This permits a buyer to evaluate wool quick ’
as to its suitability for his purpose. Putting wool into lin
actually amounts to bag-grading. ' s

Most Texas wool is sold according to the evaluation of in ,
vidual clips by buyers. Information obtained from warehous
showed that 81 percent of Texas wool is handled in this manne "ff
A buyer must match individual clips himself to assemble i;
carload‘ of similar wool. The warehouseman is helpful here u;
cause he usually knows the type of wool grown by each produce ff
In some cases, the warehouse operators catalog each clip, ent i
ing a complete description of all wool received.

Grading Texas Wooll

Seven percent of the Texas wool is now graded. About o
third of this amount is graded at the shearingpens and
remainder is graded after it enters the warehouse. Fourte
warehouses reported doing some grading. A few others sta 1
that the service was available if the grower desired it. A numb 1.
of still other Warehousemen stated that they would like to ~ 
grading practiced widely in Texas. But a few warehouse ope"
ators were decidedly opposed to grading locally, claiming 
it is a function which should be done only in the eastern mark "

The main comment made by warehousemen who favor gradi. 
but do not practice it was: “If sufficient tonnage could be gra
and offered for sale, growers would receive a very definite p
benefit. However, where only one grower in an area grades
wool, he will likely receive the same price paid the others.” ~

lTAES Progress Report 1363, Grading Wool at Shearing Pens and Ma
keting on a Basis of Quality. }

MARKETING WOOL THROUGH TEXAS WAREHOUSES 17

One warehouse in Texas is grading approximately one million
pounds of wool annually at the shearing pens. Wool in the area
surrounding this warehouse is uniformly fine and needs to be
classified principally as to length. This warehouse has trained
personnel to do the length grading. These graders are supervised
by the warehousemen who go from ranch to ranch checking the
quality of the work being done. A bag rack holding three bags
is used. If such a rack is not owned by the grower, the ware-
house loans one without charge. Each length of wool-Staple,
French Combing and Clothing—is bagged separately. Tags, also,
are piled and later bagged separately. Fleeces are brought to the
tying table, tied and grease locks removed from the fleece before
it is placed in the proper bag. In this immediate area, the sackers
pack flat bags, using two-fleece layers. The quality of shearing
is good. Shearers do a better job when so carefully supervised.
The total cost of this type of grading is from one-fourth to one-
half cent per pound. Many growers, warehousemen and buyers
consider this method of grading very practical.

Where warehouse grading services are offered, one cent per
pound is usually charged the grower. The fleeces are removed
from the bag, graded and rebagged. However, only a small ton-
nage of Texas wool is graded for the grower at the warehouse.
The bulk of wool graded by a warehouse is owned by that ware-
house and is graded to make it more salable (Figure 7). Ordi-
narily, the wool graded by a warehouse is quite variable as to
grade and is difficult to sell as such.

It is difficult to visualize exactly what effect grading would
have on the wool industry if it were uniformly practiced. How-
ever, it is only reasonable to assume that it would make avail-
able to American mills a much more attractive wool at approx-

Figure 7. Graded wool m a warehouse.

* bid with the warehouse for a specified period, then the offer f

   
   
    
  
  
    
  
   
  
   
  
   
  
   
   
  
  
  
  
  
   
   
  
   
  

18 BULLETIN 740, TEXAS AGRICULTURAL EXPERIMENT STATION

imately the same cost. Grading would make it more compara
with Australian and other foreign wool which is classed bef‘
marketing. In spite of the high market prices paid during '1
and 1950, there is no guarantee that prices will be so favora
in 5 or 10 years. The wool industry has severe competition fr,
synthetics and foreign wool, and also faces the possibility off
further reduction in tariff rates. Since wool growers are in dir'
competition with foreign wool and with synthetic fibers, it sho p,
be to their best interests to offer the market the most attracti‘
product possible. 

Wool Sales
Methods of Sale

Wool is normally sold by private treaty or through sealed bi
Auctions have been held in the State, but they have never q‘
come popular. Warehousemen are of the opinion that both au
tions and sealed bid sales result in higher prices when the ma
ket is very active. Very little, if any, of the Texas wool

K

consigned to wool dealers in the East. 

When wool is consigned by a grower to a Texas warehous,
the warehouse operator and the grower have an understandi i
as to how the sale will be made. According to information ,,
ceived from Warehousemen, one-fourth of the warehouses ,_
Texas sell consigned wool without first notifying the grower .1,
the bid received. These warehouses have the grower’s approv_
to make such a sale. All other warehouses contact their clien »
notifying them of the offer received and sell only when autho
ized by the grower. This method is somewhat slower, because ;
usually takes several days to contact and receive answers fro
each of a group of owners. In this case, the buyer will leave h

automatically withdrawn. -

Private treaty is the term used to describe the most comm,
method of selling wool. It is a matter of a warehouseman and‘.
buyer getting together on a price. Once the sale is made, t j:
grower is notified of the price received and is sent a check f
his clip, less the warehousing charges. 

At least 10 warehouses in Texas ‘use sealed bid sales alon
with the private treaty method. These sales usually involve abo 
one million pounds of wool a year. No warehouse uses the seal,
bid sale exclusively. Those that report using it do so general];
during an active market. At these sales, sample bags are open‘
for inspection. Buyers stand around the bags or a table and t 1-
fleeces are passed from buyer to buyer (Figure 8). When every”;
one has examined the clip’s sample, each buyer wishing to pla K
a bid, gives the warehouseman a sealed envelope containing 
slip of paper on which is written his firm name, lot number o;
the clip, the number of bags and the total weight, the price whic I
he will pay f.o.b. warehouse, and his signature, plus any term"
which he wishes to make concerning the purchase. These 

MARKETING WOOL THROUGH TEXAS WAREHOUSES 19

Figure 8. Buyers. at a W001 sale.

are examined in private by the warehouseman, and the buyer
making the highest bid gets the wool, provided the sale price is
agreeable with the grower.

About one-third of the warehouses in Texas buy some wool
direct from the grower. Where flocks are small and growers have
only a small clip to sell, flock owners are not particularly inter-
ested in consigning their wool to a warehouse. Usually, they
load their wool onto a truck or trailer and go from warehouse to
warehouse seeking the best offer. After receiving several bids,
they sell the wool to the highest bidder. The tonnage of wool
that a warehouseman purchases outright depends primarily on
his financial condition. It requires much capital to buy wool
unless the turnover is very rapid. Very few large clips are
bought by warehousemen because of the amount of money in-
volved. These clips are usually held on consignment with other
large lots.

A few warehousemen, however purchase large amounts of wool
each year, both independently and on order. One independent
buyer is reported to have handled 1O percent of the entire Texas
accumulation annually from 1920 to 19x50, with the exception of
one year. During one season, he handled 50 percent of all Texas
wool. Some of this wool was handled on consignment and other
clips were purchased outright.

Contracting Wool
Contracting is done prior to shearing. Binding agreements are

    
   
    
  
   
  
   
   
  
  

20 BULLETIN 740, TEXAS AGRICULTURAL EXPERIMENT STATION

made with growers by Eastern firms through their Texas rep '
resentatives and warehousemen. These contracts specify the ton-i
nage t0 be delivered and the price to be paid.

When the Texas buyer receives instructions to contract a oer--
tain tonnage, he turns this order over to one or more warehouses‘
who make the final agreement with the growers. The buyer;
through the warehouse, advances the grower a certain sum per;
head of sheep to secure the contract. The customary fee at this;
time is $1.00 per head. Since the grower delivers the wool f.o.b.~
to the warehouse, he pays the warehouse charges. - f

Upon delivery, final acceptance of the wool depends on th j
type and care in preparation originally agreed upon. If the clip}
does not meet the buyer’s approval, he may discount the clip, i
stating his reason for doing so. If the grower chooses, he may‘
reject this offer, thus nullifying the contract. This seldom
happens. 3

Contracting is of great importance to the marketing of wool;
in Texas for it involves large tonnages most years. Contractingi
of the 1949 clip, for example, covered 25 percent of the total
Texas production. The tonnage contracted varies from year to‘
year, depending on supply and demand factors. If the supply is
low and the demand is good, there usually will be more contract?
ing attempted prior to shearing. But the success of the buyer’s
contracting attempts depends on other circumstances. If the
general market appears to be promising to growers, they will
hold strong for high contract prices, which may be too high for
the buyer to meet. I

9'14; ;

Types 0f Buyers

All buyers in Texas are either representatives of Eastern
dealers and brokers, order buyers, mill buyers or independent Y;
buyers. It has been estimated that there are 80 buyers in Texas
—50 of the first three groups and 30 independent or warehouse ‘@-
buyers. No actual breakdown of these figures is available. 

Very few mill buyers come to Texas. Some buyers purchase i;
on order for mills, but very few, if any, permanent mill repre-"e
sentatives establish a residence in the State. A few representa
tives of Eastern dealers and brokers are located in Texas. Thes
firms, through their field representatives, buy wool, ship it east
and hold it there in a warehouse where it is graded, and some
times scoured and made into tops before being sold.

Order buyers make up the largest number of wool buyers.
These men buy on order for Eastern firms, usually charging one
cent per pound commission for the wool purchased. Some order
buyers represent several firms. a

Independent buyers get wool from growers and sell to anyone ,
who makes a satisfactory offer. At times, these men will buy on
order for Eastern wool companies. '

   
   
    
   
   
 
 
  
  

Buying Procedure

'When receiving an order from an Eastern firm, the buyer isl“
assigned a “limit.” That is the maximumprice he can pay for’

MARKETING WOOL THROUGH TEXAS WAREHOUSES 21

W001 based 0n a clean weight basis. The order specifies the type
0f wool desired such as 64s, staple; 60-62s and French Combing.
The buyer contacts a few warehouses to locate a prospective
purchase.

After assuring himself that the wool is of the grade and
length desired, the buyer is primarily concerned with the yield
of the clip under examination. Also very important is the matter
of preparation, which is evident to the buyer. A properly pre-
pared bag of wool requires less expense in handling by the mill
than one which is irregular as to grade, length and yield.

After examining several bags and looking at a representative
sample of fleeces, the buyer will offer the warehouseman a price
for the wool if he thinks it will satisfy his order. The price is
converted from a grease to a clean basis through an estimation
of the yield. Except in extreme conditions, a buyer will divulge
neither his limit nor his estimated shrinkage and tactful Ware-
housemen do not ask for this information.

Ordinarily the buyer will try to purchase wool in carload lots.
But if it becomes scarce, he may have to buy small lots from
different warehouses, concentrate the wool in one warehouse
and ship it from there.

Wool is bought in Texas by experienced buyers who estimate
visually the clean wool yield. Their estimations are based on
experience gained through years of buying wool. This procedure
is liable to inaccuracies at times because of the human element
present in the operation. So fundamental is the exact evaluation
of any agricultural product in the marketing of that product,
that other methods of determining yield have been sought.

Probably the most promising of all of the methods tested is
the coring method. In this operation, a metal tube is forced into
the side of a bag of wool in several places so a portion of each
fleece is theoretically obtained. When the tube is withdrawn, the
wool inside the cylinder is removed and scoured. When properly
applied, this method is usually accurate to within 1 percent of
the true shrinkage? In a test involving experienced wool ap-
praisers, only one of four estimated shrinkages was within this
margin.

This study revealed that only a small amount of coring is now
being done in Texas by growers. However, for each overestimate
of 1 percent shrinkage on wool selling for $1.50 clean basis
there is a 11/2 cent decrease in the grease price. On a large clip
of wool this would amount to a significant sum.

Loading and Shipping

Wool is shipped to the receiver shortly after the sale is made.
“Railwater” and “al1-rail” to Boston are the two primary means
of shipment generally used. Shipping “all-rail” is the fastest
method of sending wool east, but it is also the most expensive.

2Alexander Johnston and S. P. Davis, Core Sampling of U.S. Domestic
Grease Wool for Shrinkage Determination, Bulletin No. 292, Wyoming
Agricultural Experiment Station, Laramie, Wyoming, 3-4.

  
 
  
  
   
  
   
  
  
 
  
  
   
  
  
   
    
 
  
  
   
 
  
     
  
    
  
  

22 I PULLETIN 740, TEXAS AGRICULTURAL EXPERIMENT STATION

Only wool urgently needed by mills is shipped in this mann”
Wool shipped “railwater” is ultimately handled by two coastwi
steamship companies, Seatrain and the Newtex Steamship C s‘
poration. In shipping by Seatrain, the wool is loaded into a -f
in Texas and the sealed car is transported aboard a ship arou I
the seacoast to the Eastern seaboard, unloaded and sent to i
destination. This method of shipping wool is the one most co {
monly used. When Newtex is used, the wool is transported eith
by rail or truck to Gulf ports where it is unloaded and reload
in bulk into a coastal steamer. After reaching the Easte ‘
port, it is unloaded from the ship and sent on to the destinatio
either by rail or truck. ‘

Seventeen warehouses handling about 10 million pounds _
the Texas clip are located in non-rail towns. In such cases, mot
truck transportation, either to a nearby rail center or to a coast
point for water travel to the East, is required. 

If wool is shipped by Seatrain, the procedure usually followe
is: buyer and warehouseman arrange a shipping date; war,
houseman obtains a rail permit; upon receipt of permit, ca 1
are ordered from the local rail station; and cars are loade.
sealed and moved. 

Properly supervised, a crew can load a car of wool in aboli,
one hour. Each bag of wool is weighed before it enters the c ,
The sum paid each grower is based on these weights. ‘

The rail rate charged depends on the method of shipping, th
sizeof the car and the tonnage shipped. Rates vary from time _‘
time, but in 1950 it cost about 21/2 cents per pound to ship woo if_
all-rail from San Angelo, Texas, to Boston and about 214 cen a
per pound to ship via Seatrain. Different rates are charg
based on minimum tonnages loaded into 40-foot cars, of,
cars and those over 50 feet in length. The latest schedule avail
able shows the loading minimums as follows: 40-foot cars, 24,01?
30,000 and 50,000 pounds; 50-foot cars, 38,800, 48,000 and 64,8.
pounds; over 50 feet, 60,000, 80,000 and 84,000 pounds. 
The heavier the tonnage loaded into the car, the cheaper th,
rate. To get the most wool in the car, bags are placed lengthwist
and flat and stacked one on top of another. 1

1
.

Warehouse Charges

Prior to 1940, the customary commission charged for wot
consigned was approximately 21/2 percent of the sales. Sinc,
1940 and during peak wool production which was reached 
1943, the customary commission was from one cent per greas
pound down to one-half cent per pound for warehouses handlin
large volumes of wool made up of very large individual clips}
The present charge has been increased to 11/2 or 2 cents becaus
of increased labor costs and comparatively low volume of woo
produced. 

In this study, 39 warehouses reported a rate of one cent pe »
pound, but a large number of warehousemen stated they coul

MARKETING WOOL THROUGH TEXAS WAREHOUSES 23

not afford to continue this rate. Nine firms which market about
6 million pounds reported a flat rate of 11/2 cents per pound.
Eleven reported a minimum of one cent and a maximum of 11/2
cents per pound charged on the 16 million pounds they handle.
Only three warehouses handling 850,000 pounds charged rates
higher than 11/2 cents per pound.

The storage period is ordinarily 6 months. A few warehouses
charge an additional storage fee of 121/2 to 15 cents per bag per
month for periods over 6 months. Other warehouses make no
charge for additional storage time.

The standard grading charge made by warehouses that offer
warehouse grading is one cent per pound. All warehouse charges
are deducted from the final sale proceeds.

Problems of the Warehousing Industry

One of the principal problems confronting the wool ware-
housing industry at this time is the high cost of labor. This
cost has been influenced greatly by the current provisions of the
Fair Labor Standards Act (Act of 1938 as amended, U. S. Code,
Title 29, Chapter 28) which requires warehouses to pay a mini-
mum of 75 cents per hour, plus time and one-half overtime for
working over 8 hours. However, wool handlers have been granted
a 14-week exemption from the overtime regulation.

This legislation is responsible for the increasing warehouse
charges exacted from growers. Recent increased warehouse
charges will add approximately $250,000 annually to marketing
costs of Texas wool.

Small warehouses, mostly in the outlying areas of the sheep
country, present a problem which is unique to their operation.
Tonnages of wool handled by these warehouses are small and
attract very little buyer competition. Prices paid for wool are
less than prices paid for similar clips in a larger warehouse. One
possible solution to this problem was advanced by a warehouse-
man in a discussion of the problem. He pointed out that a cen-
tral sales center could be set up to handle small warehouse accu-
mulations on a grade or sample basis. Representative samples
could be exhibited, or the wools could be graded and sold on a
length-grade-shrinkage basis in conjunction with samples shown.

SUMMARY AND CONCLUSIONS

The warehouse system of marketing wool has developed from
infancy in the 187 0’s until 1950 when about 90 major wool ware-
houses were operating in Texas. No other marketing system is
significant.

The principal purpose the wool warehouse serves is to provide
a concentration point for wool. Here, the wool can be stored
safely in quantity awaiting inspection and sale. Wool buyers
can purchase by carload lots.

 
 
  
  
  
    
 
 
   
   
   
    
   
    
  
 
   
   
  
   
  

24 BULLETIN 740, TEXAS AGRTCULTURAL EXPERIMENT STATION

Fourteen warehouses handle approximately 50 percent of t l,
total Texas Wool production. Six of these Warehouses grade abo
75 percent of all wool graded in Texas.

About 75 percent of the wool in Texas is shorn as 12-mont '
wool. The remaining 25 percent is shorn as 8-months wool i-
the spring and as fall or short wool in the fall. Most wool mov
into the warehouse in April and May. The next greatest mov
ment is in September and October.

Operating procedures are similar in all wool warehouses. So 
firms encourage and assist growers in doing a better job 0
preparing Wool for market. '

In areas where flocks are large, growers do a better job u;
preparing wool for market. Small flock owners should follo?
their example. '

Warehouses are increasing commission charges from one F
11/2 cents per pound to cover increasing labor costs.

The current and prospective demand for wool should warran
Texas sheepmen in increasing their production. More discrimi.
nating prices by the trade for good preparation should serve "
an incentive to growers to produce a higher quality wool. 

The grading of wool, especially at the shearing pens, shout
assist growers in their culling and breeding program. - if

The competitive nature of the wool industry makes it impera:
tive that Texas sheepmen intensify their program of improvin
the quality of their wool and its preparation for the marke
Proper preparation of wool for market is being encouraged 
a number of the Warehouse managers. This advanced step shoul
result in a Worthwhile increase in selling prices over simila
wools improperly prepared. ‘l

ACKNOWLEDGMENTS -

Our appreciation is acknowledged to the many contribute,
who gave generously of their time and services in furtherin
the various aspects of this study. Without such help this repo _
would have been impossible. 

Our thanks are extended to the owners and operators of Tex l
warehouses who were very generous in their cooperation; to th
officers, the Warehouse committee and the magazine staff of th
Texas Sheep and Goat Raisers’ Association; to the several re;
resentatives of Boston wool firms who supplied much valuab
information; to the “Sheep and Goat Raiser,” San Angelo, Texas‘
for the loan of the front-cover picture; and to all others wh
were very helpful to us in gathering and compiling the infor’
mation used in this report. =

 

MARKETING WOOL THROUGH TEXAS WAREHOUSES 25

BIBLIOGRAPHY

Allen, Carleton M. 1947. Wool, the Raw Material. Boston Wool Trade Asso-
ciation, Boston, Massachusetts.

Buck, Warner M. 1933. Preparing Wool For Market. USDA Leaflet N0. 92

Carman, Heath, and Minto. 1892. Special Report on the History and Present
Condition of the Sheep Industry in the United States. USDA.

Christie, James W. 1939. Grading “Tool. USDA. Farmers’ Bulletin No. 1805.

Davis, Stanley P. 1937. How Texas “I001 is Marketed. Texas Agricultural
Experiment Station Progress Report 416.

Food and Agriculture Organization of the United Nations. 1947. World Fiber
Survey.

Hamilton, T. R. 1945. Trends in the Sheep and Wood Industry in Texas.
Texas Agricultural Experiment Station Progress Report 944.

Hearings Before the Special Committee to Investigate the Production, Trans-
portation, and Marketing of “I001. 1945. United States Senate, Seventy-ninth
Congress.

Hyson, Charles D. 1947. Maladjustment in the Wool Industry and Need for
a New Policy. Journal of Farm Economics. Vol. XXIX, No. 2.

Jackson, A. D. 1937. How Better Wool Is Produced. Texas Agricultural Ex-
periment Station Progress Report 419.

Johnston, Alexander and Davis, Stanley P. 1949. Core Sampling of U.S. Domestic
Grease Wool for Shrinkage Determination. IVyoming Ag. Expt. Station, Bulletin
No. 2 2.

Jongs, J. M. 1937. Growers Need Knowledge of Shrinking Percentage in Wool
Clips. Texas Stattion Progress Report 414.

Jones,  M., Davis, Stanley P., and Dameron, IV. H. 1937. Shearing Once vs.
Twice a Year. Proc. Am. Society of Animal Production, p. 158.