Wool-Price Equalisation

Press, Volume CVI, Issue 31088, 17 June 1966, Page 3

Wool-Price Equalisation

(N.Z. Press Association)

AUCKLAND, June 16. The New Zealand Co-operative Wool Marketing Association has decided to implement a price-equalisa-tion plan from September 1.

The chairman (Mr H. W. Upton) said today that the scheme would be voluntary and aimed at reducing seasonal fluctuations in wool prices and giving producers stability.

Answering a questionnaire, 86 per cent of replies from growers supported the scheme, he said. Only five per cent were opposed and nine per cent were undecided. Growers were shareholders in the association. Initially, the price would be fixed at market prices less 4d a lb, approximately 10 per cent of the expected annual average, which would be the pool contribution.

The pool would absorb fluctuations in the market price, but the schedule of fixed prices would be altered by five per cent or 2d a pound whenever the market price for any type had moved up or down by no less than five per

cent or 2d a pound, whichever was the greater.

At the end of the financial year, the pool would be shared among contributors, who might then withdraw their share or leave it on interest in a special account. Mr Upton said there was sufficient support for the plan to become operative. It would in no way interfere with the association’s marketing methods or prejudice the rights and privileges of those who wished to sell as they had in The past. Nearly all suppliers who marketed large clips were behind the scheme.

It was expected that it would take two or three years to develop the method that would effectively reduce seasonal fluctuations.

The directors did not agree that the selling results for the New Zealand wool clip in the last nine years had been satisfactory and considered that, except for the unusual 196364 “boomlet,” the over-all deal received by wool growers had been rather poor. They were also deeply concerned about synthetics, Mr Upton said. It had been agreed that wool-price instability was telling against wool, but the opinions of manufacturers who had been turning against wool because of this had been consistently ignored.

The directors considered that the persistent downward

trend in three out of four recent selling seasons was extremely dangerous to both the manufacturer and the producer. It had been pointed out that these fluctuations were slight on a sale-to-sale basis. However, they had been considerable over short periods, he said.

The plan would not upset the present auction system appreciably, and if it grew it should have a steadying effect on the market generally. Alternative wool-marketing methods had been examined and found to be mainly based on unsubstantiated theory. Mr Upton said the associa-

tion had multiplied its output six times in the past eight years and had become almost completely independent of auctions.

The association’s general manager, Mr T. C. Allen, who prepared the scheme, said the association sold 95 per cent of its wool already scoured on a direct basis at a negotiated price.