Mr Macdonald met representatives of giant British retailer Marks & Spencer last week to argue that Australian wool producers needed more time to find substitutes for mulesing, in which excess skin around a Merino sheep's rear is removed to minimise flystrike.

The practice is deplored by animal welfare advocates who say it is painful and redundant, leading Marks & Spencer, the biggest single user of Australian fine wool, to pledge to eliminate the practice in its supply chain.

A company spokeswoman said Australian wool was "incredibly important" to Marks & Spencer, which recognised there was no single solution to replacing the practice.

"That's why members of the Marks & Spencer team have been in Australia talking to people and organisations across the wool industry to discuss progress being made on this issue," she said.

Ultimately, the only acceptable long-term solution was to breed the excess skin out of the sheep, known as bare breeching, she said.

Mr Macdonald said he told the Marks & Spencer representatives they risked "throwing the baby out with the bath water" if they placed onerous conditions on Australian producers. People concerned about animal welfare should remember mulesing helped prevent sheep suffer an excruciating death: being eaten alive by maggots after flystrike.

Banning it without a substitute would be a worse result for the sheep, he said.

"Science has shown that at the moment there is no realistic solution and retailers like Marks & Spencer have to be sure we don't end up with large-scale sheep deaths in Australia as farmers struggle to meet the demands of European consumers."

Marks & Spencer, which uses 1.5 per cent of the Australian wool clip, is Britain's largest clothing retailer, with a market share of 11.2 per cent by volume. NSW produces about 210,000 bales of adult merino wool a year, worth about $800 million. However, only about 4 per cent of that wool comes from sheep that have not been mulesed.

Studies have shown mulesing cuts the rate of flystrike from 40-100 per cent to just 1-3 per cent.