4 Countries, A Failing System and 2,400 Wasted Tonnes of Wool; But Nordics Still Import

The combined sheep population of Norway, Sweden, Finland and Denmark produces 5,128 tonnes of raw wool each year. Of that total, around 2,361 tonnes are currently discarded—never sorted into any commercial stream, never washed, never spun. The wool goes to waste not because it lacks properties, but because the infrastructure and incentives needed to capture it are not in place.

Norway is the strongest performer among the four. Around 90% of its raw wool is collected, brought to one of 11 depots, and classified under a national grading standard operational since the 1950s. Even so, 1,001 tonnes of classified wool receive no payment under the subsidy system and are ultimately discarded, with a further 339 tonnes never collected at all. Norway's net loss still reaches a voluminous 1,340 tonnes annually.

Sweden produces 1,136 tonnes of raw wool each year, of which around 568 tonnes are wasted due to limited sorting, processing and marketing infrastructure. Finland discards an estimated 205 of its 289 annual tonnes—a rate the feasibility study estimates at up to 70%, based on research placing the range at 50–70%. Denmark, where 74% of sheep farms hold ten or fewer animals and no official wool collection exists, loses an estimated 248 of its 318 annual tonnes. Iceland alone processes 98–99% of its wool through a single vertically integrated operation, and stands as an outlier.

What makes the discard rates in Finland and Denmark particularly striking, as the feasibility study found, for most breeds in that country, good-quality wool makes up at least 80% of total raw wool sheared. A large share of what is being thrown away is not low-grade material. It is usable fibre that the system simply has no mechanism to collect.

At the same time, all four countries are importing wool and wool yarn from abroad. In 2024, the Nordics together imported 6,543 tonnes of unprocessed wool and wool yarn, according to Eurostat data compiled for the study. The majority arrived as yarn—fibre that had already been washed, carded or combed, and spun. Importing it in processed form points not simply to a shortage of raw fibre, but to a shortage of the processing capacity needed to convert domestic fibre into a usable product. The study estimates that a functioning Nordic value chain could theoretically replace 31% of current imports—a substitution that the import volumes confirm sits well within plausible demand.

The economic cost of inaction has been calculated. Based on what manufacturers would realistically pay for wool suitable for yarn, nonwoven, and non-textile applications, the study values the currently under-utilised Nordic wool at €127.6 million per year. Yarn-grade wool drives the overwhelming majority—€102.3 million—reflecting the steep value gradient between raw and processed fibre. Nonwoven applications account for a further €24 million.

Fragmentation is the mechanism that prevents this value from being realised. No single Nordic country has the volume to achieve competitive processing costs alone. Collectively, the region has the wool. What it lacks is the infrastructure to process it and the coordination to bring it together.

Nordic wool has a reputation problem—and the reputation as we see is largely unearned. The industry default is to measure wool quality against fine Merino softness, the standard that dominates global textile markets and consumer expectations. Against that benchmark, Nordic wool consistently falls short. It is coarser, more pigmented, more varied in fibre type across breeds and body parts. But the feasibility study is direct on this point: the term "quality" is being misapplied.

Coarseness is not a defect, but a characteristic that determines suitability for purpose. Coarser fibres are ideal for furniture fabric, carpets, sweaters, socks, and interior products—all requiring durability rather than skin-close softness. Pigmented wool, often treated as commercially worthless, is valued by some manufacturers precisely for its natural colour. The study reframes the question entirely: Nordic wool is not failing to meet a universal standard. It is being assessed against the wrong one.

This misreading has unintended consequences. It suppresses farmer incentives to improve shearing and sorting practices, since wool perceived as low value attracts low prices regardless of handling. It limits the range of industrial buyers willing to experiment with Nordic fibre. And it becomes self-reinforcing—poor handling produces inconsistent supply, which confirms the perception of low quality, which depresses prices further and removes any incentive to invest in improvement.

The absence of shared classification systems compounds the problem. Norway has maintained a functioning grading standard since the 1950s, with trained classifiers, set pricing per class, and a collection infrastructure built around it. Sweden introduced a new national wool standard in 2025, partially harmonised with the Norwegian system. Denmark and Finland have neither. Without classification, industrial buyers cannot assess supply with confidence, cannot commit to consistent sourcing, and cannot offer stable prices. The feasibility study identifies this gap as a foundational barrier to building any Nordic-scale market.

Collection is a separate but related bottleneck. Sheep farms across the region are small and widely dispersed. Transport costs per kilogram are high because wool is low in density—bulky to move relative to its value—unless compressed before shipment. In Denmark, hobby farming dominates: 74% of farms hold 10 or fewer animals, with no organised collection system for that segment. In Finland, distances across the east and north of the country make individual farm logistics expensive. The study notes that areas such as Finnish Lapland, located around 1,000 km from the nearest spinning mill, may have to be excluded from any viable collection network entirely.

Scouring (the industrial washing process that removes lanolin, dirt and vegetable matter from raw wool) presents another structural absence. Across the four countries, there is effectively one small commercial scouring facility in Sweden, processing 100 tonnes per year, and some smallscale scouring plants in Norway. The overwhelming majority of Nordic wool that does get collected is shipped to the United Kingdom for washing, adding cost, transport emissions, and processing delay. The feasibility study concludes that a single largescale Nordic scouring plant is not viable at current volumes, and proposes instead a network of smaller, distributed washing stations co-located with collection hubs.

Each of these gaps—in classification, collection, and scouring—exists in partial isolation. Elements of the wider value chain are present across the region: spinning mills operate in all four countries, felting capacity exists in Sweden, weaving and knitting facilities are scattered across the region. But they are disconnected. No integrated chain links them. Without that integration, volumes stay small, costs stay high, and Nordic wool remains unable to compete on price with imports from New Zealand or Australia.

The feasibility study does not stop at diagnosing the problem. It identifies a set of policy instruments and infrastructure investments that, taken together, could begin to close the gaps described in the previous section. None are presented as guaranteed solutions. But collectively, they constitute the first coherent attempt to map what a functional Nordic wool market would actually require.

On the policy side, the Norwegian wool agreement—which has compensated farmers for collected wool at pre-set rates since 1952—is held up as a model worth extending. The study argues that farmer compensation mechanisms are essential to shifting wool from a discarded by-product to a managed resource. Without a financial signal that wool has value, farmers in Sweden, Finland and Denmark have little incentive to invest in improved shearing, sorting or handling.

A common Nordic classification standard, building on the Swedish model of 2025 and aligned with the existing Norwegian system, is an equally urgent instrument—though the study notes that the standard is yet to be implemented at existing collection stations across the country. The study notes that the standard was tested at the European Wool Championships in Finland in 2025, where it proved applicable across almost all Nordic breeds and production conditions. Infrastructure investment is the third policy requirement—particularly mid-scale scouring and spinning capacity that can handle volumes large enough to be price-competitive. EU reshoring priorities and tightening traceability requirements are identified as potential regulatory and funding tailwinds.

The most concrete development currently under way is in Forsa, outside Hudiksvall in Hälsingland, Sweden, where Swedish Textile and Holma Helsinglands AB are developing a co-located operation covering collection, sorting, washing, spinning, and weaving—a compressed version of the full wool value chain within a single site. The ambition is to have it fully operational within a year, with the hub intended to function as a Nordic aggregation platform where wool from across the region can be directed, processed, and matched to buyers.

Early case studies from the initiative suggest the model is not purely theoretical. Insutex, a Danish construction insulation company, conducted fire tests on Nordic wool and found it highly suitable for acoustic panels and thermal insulation. VERK, a Swedish furniture producer, has built an entirely domestic supply chain—collecting, washing, spinning and weaving Swedish wool into upholstery fabric that exceeds 70,000 Martindale in abrasion resistance. Tiger of Sweden has committed to including at least one Swedish wool product in every collection. These are not pilot experiments, but early proof points that demand exists across multiple sectors when supply is made accessible.

The study identifies four broad market sectors with realistic potential to absorb Nordic wool at commercial scale. Textiles—yarn, tailoring, and interior fabrics—represent the highest-value segment, with yarn-grade wool estimated at approximately €183.68 per kg at manufacturer level. Construction applications, including insulation and acoustic panels, offer significant volume potential for coarser fibres. Technical and nonwoven applications provide a pathway for wool that cannot meet yarn specifications. Industrial substitution for both imports and synthetic materials rounds out the demand picture.

The strategic stakes extend beyond commercial returns. A functioning Nordic wool value chain would strengthen supply-chain resilience at a moment when global wool production—particularly from New Zealand and Australia—is under sustained pressure from shifting farm economics and declining output. Sheep grazing is also directly linked to biodiversity outcomes: the study notes that grazing maintains open semi-natural pastures among the most species-rich habitats in the Nordic region, and that increased demand for wool provides a market-based incentive to sustain those systems.

The infrastructure is beginning to take physical form. The question is whether policy frameworks and industry commitments will follow quickly enough to make it viable.

The Wool Leap Question

The Nordics are not facing a shortage of wool. They are facing a shortage of will—political, industrial, and logistical—to do something with what they already have.

The choice is straightforward to describe, if not to execute. Continue exporting raw fibre and importing processed yarn, absorbing the €127.6 million annual loss as a structural cost of inaction. Or build a coordinated circular wool market, one that requires harmonised standards, farmer compensation mechanisms, logistics investment, and mid-scale industrial processing.