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New Zealand falls out of love with sheep farming as lucrative pine forests spread
(www.theguardian.com)
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My uneducated guess is that the raw material is only a fraction of the processing, manufacturing and distribution costs.
I guess its more a question of what that fraction is versus cotton or synthetics, and then what the cost of processing is for wool vs cotton & synthetic.
Harvesting wool is done by hand, and takes probably 1.5-2.5 people per sheep (depending on how many shearers the rousey can work at once, how big the shed is, whether sorting & pressing is done by another person as well as someone in the yards) and that's excluding the farmer. I would guess that automatically makes it more expensive as a raw product than alternatives.
I don't know how total emissions stack up for wool vs synthetic production, but the article suggests that sustainability be used as a rationale for subsidies.
I guess you have to start weighing up impacts of higher stock numbers vs impacts of non-degradable plastic. What do carbon emissions of sheep farming look like compared to say cattle? Because subsidising wool would surely lead to an oversupply of sheep meat.