Unchanged Floor Price “Danger To Everyone”

Press, Volume CVII, Issue 31380, 27 May 1967, Page 1

Unchanged Floor Price “Danger To Everyone”

A suggestion that the floor price for wool should remain unchanged for the next wool-selling season was described yesterday by a group of woolbuyers in Christchurch as a potential danger not only to the farming community but to everyone in New Zealand.

The suggestion was made by Mr T. C. Allen, general manager of the New Zealand Co-operative Wool Marketing Association.

A spokesman for the group, Mr F. J. McNeill, said that they would agree with Mr Allen that the Wool Commission should announce its

floor price for the new season as soon as possible, but they could not agree that It would be a catastrophe if the price were lowered. Wool was being bought by the Wed Commission at ‘l5 to 20 per cent above world prices. Mr Allen's statement would suggest that he was expecting a rise of about 15 to 20 per cent in the present

world price for crossbreds in the next 12 months, but indications from all major woolconsuming countries were that such a rise was impossible, unless something extraordinary occurred. If the Wool Commission , proceeded along the lines : recommended by Mr Allen it - would buy not only 600,000 . bales this season, but at least i an additional 400,000 bales by ■ next Christmas. This million- ; bale stockpile would be a dark : cloud hanging over the Ne v Zealand wool market for very many years. New Zealanil wool-selling broken were »1ready under extreme pre-nure ; in handling and marketing ; only about 200,000 bales a i month. The purchase of this wool ; could have repercussions in overseas financial circles because of the heavy borrowing the Government would be forced into.

Mr McNeill said that the group would like to know where the money would come from to finance the commission’s purchases when the present funds were exhausted. The group did not consider it fair or logical that the country should be exposed to any further borrowing for the purchase of wool by the commission. “We do not dispute that the troughs in the wool-price cycle, recently referred to by Mr W. L. Keen, chief economist of the' Meat -and Wool are surely everyone in the business is fully aware that the present trough is the deepest since the depression of the 19305, and the repercussions have still to be felt.”