PROGRESS OF WOOL DISPOSALS

Press, Volume LXXXV, Issue 25738, 25 February 1949, Page 6

PROGRESS OF WOOL DISPOSALS

977,000 Bales From N.Z. Already Sold

(P.A.) WELLINGTON. February 24. The Minister, of Marketing (Mr E. L. Cullen) to-day released the first report and statement of accounts of the New Zealand Wool Disposal Commission and United Kingdom Dominions Wool Disposals, Ltd. (the Joint Organisation), and a summary of operations issued by the Joint Organisation, London. Commenting on sales of New* Zealand wool, Mr Cullen said that the opening stocks of 1,777,000 bales on August 1, 1945, had been reduced by 55 per cent, to 800.000 bales by June 30, 1948. It was possible that by June 30. 1949, stocks would be down to 40d,000 bales, half of them held in New Zealand and half in the United' Kingdom. In terms of the marketing plan, the New Zealand Government had agreed to find in four annual instalments the capital represented by one half-share it had acquired from the United Kingdom Government in the net value of the opening stocks, in the event that the New Zealand Government’s one half-share of the sales of stock wool, less expenses, was insufficient to meet these capital commitments. This one half-share in the opening stocks amounted to £13,290,024 sterling. and the annual instalments to £3.322,506 sterling for four years. The Minister said: “The Joint Organisation’s operations have proceeded very satisfactorily, and sales of stock had been made at a rate and at prices exceeding expectations when the plan was launched. The position at June 30, 1948, is that the proceeds of the disposal of 977,000 bales of wool have been sufficient to meet the organisation’s one half-share of operating expenses and other charges to meet fully the first three of the four annual capital payments of £3.322,506 sterling due from the New Zealand Government. and to leave only £1,054 587 owing on the fourth and final capital payment. “This final capital payment has since been made from the New Zealand Government’s share of the proceeds of sales of stock wool during the .current 1948-49 season.” N.Z. Government’s Position

Summarising the position of the New Zealand Government, on June 30, 1948, Mr Cullen said it had one halfshare in the sale value of stocks at that date, amounting to 800,000 bales, efter allowing for the organisation’s one half-share of operating expenses incurred during the period of sale. Out of this one half-share, the New Zealand Government had to find the

balance of the final ca'pital instalment, £1,054,587 sterling, and the remainder of the proceeds s would represent the New Zealand Government’s share of the final profit. The amount of this final profit would depend on the time taken fox the disposal of the remaining stocks and the net price received for them, after allowing for expenses. A further factor was! 1 the possibility that during the period of sale of the final stock, there might be buying-in of wool by the Joint Organisation at reserve prices. Indeed, while expectations were that the results would finally yield a profit, there could be no certainty of this. Mr Cullen referred to an agreement entered into between the Government and the New Zealand Wool Board on behalf of the wool industry, in terms of which the Wool Board undertook that any balance remaining in its contributory charge account when the Joint Organisation was wound up, would be used as the nucleus of a fund for establishing a post-Joint Organisation marketing plan for wool. The Government undertook that any ultimate balance of the profit arising from the transactions of the Joint Organisation would be similarly used.

Stabilising Influence of J.O. Referring generally to the wool marketing plan, Mr Cullen said its value as a stabilising influence in the market had been demonstrated notably during the 1946-47 season, When in New Zealand the Joint Organisation had purchased at reserve prices 108,000 bales of wool, or 12 per cent, of the clip. The stabilising effect of this purchase was made more significant by* the recovery in crossbred prices which later occurred. The amount of wool bought in by the organisation inadequately reflected the extent of support afforded markets. because very frequently the organisation had been called on to start the bidding on a considerable quantity of wool, or even initially to buy in wool which had been subsequently purchased by the trade within the option period at the reserve prices or higher. It was well known- that New Zealand’s war-time accumulated stocks and current clips, which were predominantly crossbred in character, presented a more serious marketing problem than was the case with the finer wools in Australia and South Africa. It was gratifying, therefore, that of the three Dominions, the fullest demonstration of the satisfactory working of the marketing plan had been made in New Zealand.