MARKETING OF WOOL

Press, Volume LXXXVI, Issue 26129, 3 June 1950, Page 8

MARKETING OF WOOL

SCHEME TO REPLACE J.O. STATEMENT BY MR HOLYOAKE From Our Own Reporter WELLINGTON, June 2. The New Zealand Government has approved the proposals of the recent London Commonwealth wool conference for a wool marketing plan to become operative when the present Joint Organisation, which was formed in 1945 to dispose of accumulated wool stocks, completes its work, probably in June of next year. The Minister of Marketing (Mr K. J. Ho;yoake) gave this information to-day and said that the marketing proposals now approved had been strongly advocated by the Wool Board. The Government was awaiting the decisions of the Australian and South African Governments on the proposals. The next step would be to seek international assent for the scheme in terms of the Havana Charter. The marketing plan proposed by the conference, which it was hoped would embrace the United Kingdom, Australia, South Africa, and New Zealand. is on the lines of the present disposal scheme with reserve or floor prices as its central feature. Growers would continue to sell their wool at auction as at present and the new organisation would be prepared to buy at "’reserve or floor prices should the commercial buyers net bid those prices or better. By this means, the organisation would seek to modify sharp downward fluctuations of short-term kind. Wool bought-in in such a period would, when resold, tend to modify the corresponding upward movements. It had been generally agreed that it was not desirable to attempt to maintain wool prices over the longer term out of line with the price movements of other commodities. It was also felt that any plan involving ceiling prices would be inconsfstent with a system of marketing wool by auction. “Fluctuations Disruptive” Mr Holyoake gave arguments in favour of limiting price fluctuations as follows:

(1) Frequent and large fluctuations in raw material prices were economically disruptive, not only to the economies of the primary producing countries, but. by repercussion, also to the economies of countries from which they imported. Wool, in particular, ranked fourth in value pre-war among the raw material exports and was the most important export commodity from Australia. It was second only to sold from South Africa and of tively equal importance with meat and dairv produce from New Zealand. (2) The buying power of all three wool-growing Commonwealth countries provided major markets to the United Kingdom and to other manufacturing countries.

(3 Further periodic steep price fluctuations in farm products led to unstable farming systems and a decline in fertility. . Asked about finance for the proposed new scheme. Mr Holyoake said that in the then Government had agreed with the Wool Board that New Zealand’* h»lf-share of the Jo-nt Organisation nrofits and the surplus growers contributorv charge moneys shov'd be available as capital ter the scheme. That arrangement had the approval of the present Government.