Wool Reserve ‘Too High'

Press, Volume CVII, Issue 31440, 5 August 1967, Page 1

Wool Reserve ‘Too High '

Persistent buying by the Wool Commission could result in New Zealand holding 1,300,000 to 1,600,000 bales of a costly and functionally useless commodity by the end of next June, Mr B. N. Thompson, New Zealand secretary of Manning and Dodds, Ltdo woolbrokers, said in Christchurch yesterday.

"The commission’s reserve price is still too high and will have to drop quite a few cents to compete with the present declining world prices of all fibres,” he said. “More than 45 per cent of all the wool offered at the first sale of the new season, at Wellington this week, was

bought by either the commission or New Zealand interests. Thus, nearly half the quantity offered earned not one iota of overseas currency as raw wool. “We could, of course, burn the wool as the Brazilian Coffee Board destroyed coffee beans. We could also be sensible and let it be sold at current world prices to compete with, and in some cases oust, the man-made fibres which now have a hold on the world’s clothing and carpet markets. “Frankly, wool is outpriced,” said Mr Thompson. "It will become outmoded because of this, and is being relegated rapidly to the position of a secondary fibre.” He wondered if any woolbuying firm in New Zealand would deny that since the commission started buying in quantity fewer orders had been received and that these were at lower and still lower prices.

“But and here is the tragedy, orders are being received but are having to be turned down because the price is a few cents below the commission’s reserve. Some of these orders may be lost for ever to synthetics, or to other countries willing to accept lower prices.”

According to figures released by the British ManMade Fibres Federation, production of man-made fibres reached its highest total in the month of May, 1967, of 82,700,0001 b. In April, production had been 78,620,0001 b. “During this same month the Wool Commission was buying more than 80 per cent of the wool offered at auction," said Mr Thompson.

“Australian prices for medium crossbred wool on a clean basis on July 14, 1967, were 36 per cent (18c) down as against prices for the same date in 1966, according to the Wool Statistical Seri

vice of the Australian Wool Board. Prices for carding wools ranged from 27 per cent to 36 per cent down on the previous year, and combing wool prices from 8 per cent to 26 per cent down. “But the wool is being sold and, with increased production, the gross proceeds from wool were only slightly down,” he said. “It is very doubtful if a history of previous profitable Wool Commission purchases will repeat itself. Current and future stockpiles, combined with storage insurance and the cost of building large storage facilities, cannot be considered an asset but will be a very burdensome liability on the New Zealand economy," he said. Mr Thompson said the wool textile industry had a future, but only if there was a reversal of the unrealistic approach of the commission. Federated Farmers, and the Government