Despite having considerable wool production, Kashmir exports 34 lakh kg of wool a year at throwaway prices due to lack of processing units. This resulted in losses of crores of rupees to the state economy as well as farmers. The Wool Board is able to purchase only 1.5 lakh kg a year out of the 34 lakh kg produced in the valley. The board was established in 1980 for undertaking market interventions in the wool sector.

The wool exported from Kashmir to Punjab and other states does not fetch breeders more than Rs 80 or Rs 100 per kg and in return finished woolen products from the same wool are bought back to the valley costing thousands of rupees.

Monopoly of middle men continue as the Wool Board apart from doing limited grading and auctioning of wool is unable to work like a regulator of this industry in Kashmir. It is not even able to play the role of a rate fixation authority. Ideally it should have been setting a base price of wool purchase from breeder to exporters but there are many hurdles in doing so such as a resource crunch. Jammu and Kashmir in total produce almost 80 lakh kgs of wool annually.