Advantages Seen In Wool Appraisal System

Press, Volume CI, Issue 29851, 18 June 1962, Page 15

Advantages Seen In Wool Appraisal System

Payment of woolgrowers on an appraised value rather than a sale value would eliminate the harmful effects of fluctuations in wool values for growers, said Professor B. P. Philpott, professor of agricultural economics at Lincoln College, speaking to the Kuakura farmers' conference last week. This could be achieved relatively easily, he said, by modification of wool-selling procedures so that at the beginning of a season a realistic average price was set for the whole clip. Growers’ wool was appraised on the basts of a bareme worked around this average, the wool was sold at auction, and at the end of the season growers were paid a bonus equalling some proportion of the difference between the appraised and season’s average auction price for each type and style grading of wool. The balance was put to reserve for years when the appraised price exceeded the average auction market price and no bonus was therefore available. Among advantages o’ the system listed by Professor Philpott were that i. would result in g owers being paid on the quality, style and getup of their wool and premiums could be pa d to those who were attempting to improve the style and getup and produce the qualities required by the market. Earlier Professor Philpott

had suggested that under the present marketing system there was often no premium for extra care in preparation and get-up of wool and market requirements were not necessarily reflected in prices, and the market was characerised by almost ceaseless fluctuations in prices annually, monthly, daily and even over the course of any one sale

To introduce wool marketing arrangements of the appraisal type would not be very difficult, he said, and could be done at any time, but tb*s would be only rimed at reducing the effects of fluctuations on the payout to the producer, while leaving the open market to fluctuate as much as it liked. To go a stage further and even eliminate open market fluctuations and their effects on consumers would be also quite possible, but would be much more difficult administratively and would require ■he agreement of-the major producers. To reduce world-wide fluctuations would require the operation of a world-wide wool commission operating as a stabirs ng force m the market It would set a floor price and a ceilin’ price at which it stood ready to buy or sei' w<—’ and in SO doing it could confine fluctuations in price to the range between these limiting prices It would not wish to interfere with the general long-term trend of prices and it would have to slowly amend its buying

prices upwards or downwards in conformity with this trend. In the meantime. Professor Philpott suggested, more effort and money should be spent on determining what overseas customers wanted from this country's wool, its faults and what premium? could be obtained for special styles and types for special purposes. To some extent the Internationa] Wool Secretariat had made a star’ along these lines, but it was an Internationa! body concerned with wool of all types, whereas New Zealand was a specialist producer of a type of wool for which special information was needed Professor Philpott suggested that these measures were needed because the existing price mechanism was a very imperfect indicator of this