Wool Prices: A 10-Year Comparison

Press, Volume CI, Issue 29798, 14 April 1962, Page 7

Wool Prices: A 10-Year Comparison

(By Our Commercial Editor)

What is a pound of wool worth today, compared with 10 years ago? Only about Mid per lb (114 per cent) less, if one compares the average price per lb of the New Zealand clip in the 1951-52 season with the estimated average for 1961-62. But if allowance is made for increases in sheepfarmers’ costs over the same period, the drop is of the order of 30 per cent This conclusion is reached from calculations based on estimates of sheepfarmers' costs over the period made by the New Zealand Meat and Wool Boards’ Economic Service. The estimates for each year are published in a paper by the service’s senior statistician (Mr W. L. Keen). The exercise was suggested by the publication in the "Sydney Morning Herald” last week of an article on Australian wool prices and the effect of rising sheepfarmers’ costs in Australia. The New Zealand sheep - farmer has fared better than his opposite number in Australia over the last 10 years, but this may be small consolation to him.

TABLE 1 Australian and N.Z. Average

The first table compares wool prices in Australia and New Zealand in each of the years since 1950-51 (the year of the Korean wool boom). The Australian prices quoted are taken from the “S.M.H." article, converted to New Zealand currency (at £AIOO equals £N.Z.BO) for ease of comparison. The New Zealand prices are the average prices for greasy wool sold at auction in New Zealand, as published by the New Zealand Wool Commission. The third column shows the Australian price as a percentage of the New Zealand price. Thus, in 1950-51, Australian wool fetched 131 per cent of the price per lb for New Zealand wool —the net Australian wool fetched a premium of 31 per cent, over the New Zealand wool This premium rose to 44 per cent, in 1951-52, but has declined, almost year by year, since then, to a mere 3 per cent, in 1960-61. The decline reflects a trend in demand away from fine wools towards coarse wools.

The Australian grower has lost ground, comparatively, to the New Zealand grower, through this change. TABLE 2 Australian and N.Z. Prices, deflated for cost increases Aust. N.Z.

The next table shows the effect of rising costs on the woolgrower’s return from his wool. Woolgrowers’ costs are calculated in Australia by the Bureau of Agricultural Economics, and expressed as an index figure. The “S.M.H.” article tabulates the average

price per lb of wool in Australia for each year since 1946-47, corrected for changes in costs since 1946-47. The “S.M.H.” table shows that, although the average price rose from 24.49 d (Australian) to 52.06 d between 1946-47 and 1960-61, woolgrowers’ costs rose even faster over the same period; the 52.06 d received in 1960-61 actually returned the grower only 19.95 d, in terms of 194647 values.

, (The “S.M.H.” calculations have been converted to a 1951-52 base—the same as Mr Keen’s base year—and expressed in New Zealand currency in Table 2.)

Mr Keen’s index of changes in sheepfarmers’ costs has been used to deflate the New Zealand wool prices in Table 2. Of the three types of sheep farm—high country, hill country and fattening—for which Mr Keen has calculated costs, the hill country farm costs have been chosen for this series as probably the most representative of the three.

The figures in Table 2 are an appropriate measure of

the “real” value of a pound of wool in the two countries, in terms of 1951-52 purchasing power of sheep farmers in each country. (It should be pointed out that this does not imply that purchasing power of a unit of currency —even allowing for the difference in the exchange rate —was equal in the two countries in 1951-52, or in any other year. The series merely measures changes in each country since 1950-51.)

TABLE 3 Index of Australian and N.Z. Prices, deflated for cost increases

The last table expresses the prices in Table 2 in the form of an index series, with 195152 as a base. Disregarding the abnormal 1950-51 year, the real value of a pound of wool fell 45 per cent, by 1960-61 in Australia, and 27 per cent, in New Zealand.

Prices Aust. NZ. Aust. Season d <NZ) d (NZ) as % per lb per lb of N.Z. 1950-51 . . 115.35 87.84 131 1951-52 . 57.94 40.19 144 1952-53 . 65.44 46.19 142 1953-54 . 65.20 50 25 130 1954-55 . .. 56.70 49.67 114 1955-56 . .. 49.17 46.19 106 1956-57 < .. 63 73 54.76 116 1957-58 . 49.96 41.16 121 1958-59 . . 38.86 36.07 108 1959-60 . 46.22 44.65 104 1960-61 . .. 41.65 40.34 103 1961-62 .. n.a. •Estimated. 39.60* n.a.

Season d (NZ) per lb d (NZ) per lb 1050-51 .. . 144.9 100.6 1951-52 .. . 57.9 46.2 1952-53 .. . 60.9 45.4 1953-54 .. . 59.6 47.8 1954-55 .. . 51.6 45.7 1955-56 .. . 43.2 41,8 1956-57 .. . 53.4 48.4 1957-58 .. . 40.6 35.6 1958-59 .. . 32.1 30.7 1959-60 .. . 36.9 37.8 1960-61 .. . 32 1 33.5 1961-62 .... n.a. •Estimated. 32.4*

(1951-52 equals 100) Season Aust. N.Z. 1950-51 250 218 1951-52 100 100 1952-53 ...... 105 98 1953-54 ...... 103 103 1954-55 ...... 89 99 1955-56 74 90 1956-57 ...... 92 105 1957-58 ...... 70 77 1958-59 55 66 1959-60 64 82 1960-61 ...... 55 73 1961-62 •Estimated. n.a. 70*