Following the release of a new draft standard for wool production created by not-for-profit organisation Textiles Exchange, Australian growers warned that failing to changes its approach to animal welfare would fall further behind their competitors said Italian wool buyer Modiano.

Responsible Wool Standard (RWS) sets out guidelines for growers to meet around animal welfare and sustainability and prohibits museling, the practice of surgically removing skin surrounding a sheep's tail to prevent fly-strike.

If the RWS is accepted by retailers next month, major brands like Target and H&M will be encouraged to exclusively buy non-mulesed or cease-mulesed wool.

Modiano's Australian managing director Stuart Clayton said that this renewed push to stamp out surgical mulesing could affect demand for Australian wool.

Countries like New Zealand and South Africa, their markets would probably continue to be strong as they are at the moment and Australia would probably be the only country that would largely suffer.

Modiano has led a sustained campaign to phase out surgical mulesing and make the use of pain relief mandatory in instances where it’s not possible for producers to stop.

Mr Clayton said that European buyers were refusing to use Australian wool because of the use of growers using mulesing, despite Australia's reputation as a world leader in animal welfare.

According to Modiano, non-mulesed wool was attracting a up to $1 more than mulesed products, and said this figure could increase if demand for non-mulesed wool continued.

Australian Wool Innovation seems to take the approach of putting their head in the sand on this issue and they need to be proactive and get the message out that woolgrowers are doing the right thing, Mr Clayton said.

However, Australian Wool Innovation defended its record, saying it regularly holds briefings with large retail associations in key markets. The industry body also said that woolgrowers had invested $33 million on flystrike prevention since 2005, and was a world leader in the development of pre and post mulesing pain relief for sheep.

Australia is by far the biggest producer of non-mulesed apparel wool in the world and the National Wool Declaration offers buyers the opportunity to reward woolgrowers' practices, an AWI spokesperson said.

Every AWI marketing program both domestically and globally champions the sustainable, ethical and versatile aspects of Australian wool.

WoolProducers Australia chief executive officer Jo Hall said that not all growers would be able to phase out mulesing completely. Hoewever, she said that higher premiums for non-museled wool might encourage more growers to find alternative ways to control fly strike.

The fact is Australian wool is produced across a large range of geographic and climatic conditions and the industry is working towards finding a suitable alternative to mulesing.