Australian Wool Brokers’ Proposals

Press, Volume CVI, Issue 31339, 8 April 1967, Page 10

Australian Wool Brokers’ Proposals

The National Council of Wool Selling Brokers of Australia has called for the establishment of a freeenterprise marketing organisation to administer the Australian wool selling system.

The council also proposed far-reaching changes in wool selling procedures. These aim to streamline the auction system, curb selling costs and maximise growers* returns.

The president of the National Council of Wool Selling Brokers of Australia, Mr A. S. Dunstan, said the council’s proposals offered growers for the first time in 124 years of Australian wool auctions the opportunity of participating in the management of the wool marketing system. The wool selling regulations had been agreed traditionally between brokers and buyers, brokers acting on behalf of woolgrowers. The council, he said, re-

affirmed tt* endorsement of the free-enterprise auction system, its doubts about reserve price schemes and its rejection of acquisition.

The council said that proposals to alter radically the Australian wool selling system usually involved the industry in some loss of freedom and flexibility and would give growers no positive assurance of continuing improved returns. It warned against the creation of a selling system which, while appearing to give theoretical benefits to growers, denied the interests of overseas buyers and users, ft said that adverse industry reaction to such a system might prove harmful to the welfare of growers and the nation.

The council comprises 22 woolbroker firms, which sell at auction on behalf of growers most of the national wool dip. The gross value of Australian wool production in 196667 is expected to be 818 million dollars. The wool marketing organ-

isation proposed, by the council would be a non-statutory body representing grower, broker and buyer sectors of the industry.

ft would be controlled by a board of 12 directors—six growers, three buyers and three brokers. The chairman would be a grower and would have a casting vote. This would give growers a dominant position on the board.

The wool marketing organisation could alter wool selling rules and regulations and could initiate and resolve other matters related to the auction selling of the dip. Its other functions would include market research, wool sale programming, wool production forecasts and registration of brokers and’buyers.

The council also recommended that the proposed wool marketing organisation consider - these changes in selling procedure: A marketable parcel of wool would be four bales or more.

Excluded from this provision would be specialty wools

and a grower’s main fleece line which may be sold in a lot of three bales. (Wool at present is sold in “star” lots of four bales or less, or in “big” lots of five bales or more. “Star” lots comprise about 25 per cent of the number of bales offered at auction in Australia, but 58 per cent of the lots offered for sale. This provision would eliminate “star” lota.)

One, two or three-bale lots received for sale would be interlotted into lots of four bales or more, or if not properly prepared for market, would be bulk-classed.

Growers would retain the right to nominate reserves on lots of wool catalogued for sate under their own brand.

The council said it believed its proposals would bring: A stronger public auction system in which the inherent advantages for growers and buyers would be maintained. Heightened buyer competition for wool thereby maximising growers’ returns.

Curbing growers’ selling costs.

Preservation of buyers’ freedom of access to all Australian wool. Elimination of starlot catalogues and preservation of growers’ identity in four-bale lots. EstaMlsbment of a medianism whereby the industry could take prompt action to adjust the selling system to meet changing circumstances and conditions. The council said it believed there would be a continuing and consistent demand for apparel type fibre which comprised 95 per cent of the Australian clip. But it warned that legislative interference with established and internationally accepted selling procedures could cause resistance by Australia's buyer customers and engender depressive influences in the market. No matter what price-con-trol mechanisms were inserted into the selling system, Australia could not compel the world’s wool users to pay prices set by any marketing authority. Nor could overseas customers be forced to subsidise Australia’s selfcreated rising internal costs.

A radical change In selling would not necessarily achieve a higher price for wool, lower selling costs, or remove fluctuations in prices paid by users. A guaranteed price did not assure a profit margin to producers, but would involve inevitably imposition of arbitrary controls.