WOOL SUBSIDY TO BE INTRODUCED

Press, Volume CVII, Issue 31500, 14 October 1967, Page 1

WOOL SUBSIDY TO BE INTRODUCED

Commission Will Buy At New Level (New Zealand Preet Association) WELLINGTON, October 13. The Wool Commission decided tonight to retain the floor price to growers at the present average level of 25 cents a pound but to lower its average buy-in price at auction by 35 per cent.

This gives a new auction “reserve” of 16} The new procedure will apply for the first time at the Auckland sale on October 18. The Prime Minister (Mr Holyoake) said tonight the Government supported the Wool Commission’s decision.

The chairman of the commission (Mr E. L. Greensmith) said: “We have in effect two levels of price—the floor of 25 cents previously agreed oi/for growers in the 1967-68 season and a new auction reserve, which we consider will give adequate scope for the market to settle to a new trading basis.”

“We expect that on this new basis there will be a minimum of purchasing by the commission,” he said. “Any difference between the price realised at auction by a woolgrower and the floor price established for his wool on the existing 25 cents basis

will be made up by way of a separate supplementary payment. “The method of making the payment will be announced shortly, as soon as arrangements with woolbrokers are (Completed,''- said Mr Greensmith. The commission has used

virtually all its s74m reserves to buy wool. The initial reaction to the announcement was critical.

Mr F. G. S. Ackman, chairman of the Meat and Wool Council of Federated Farmers, said the Government had allowed itself to be “panicked into a hasty and ill-consider-ed decision, and a breach of faith with farmers.”

Mr P. S. Plummer, president of Federated Farmers, said it was apparent a decision had been forced on the commission by the Government

Tonight’s announcement came after three days of speculation that a change was in the air, during which the Cabinet wool committee met representatives of the wool industry twice, reports from Bradford were received that the commission would cease buying under the floor price scheme, and the commission met today to discuss the results of th* Napier sale and its activities in general. Earlier today, the Deputy Prime Minister (Mr Marshall) presided at a meeting of the Cabinet wool committee' and representatives of >the Wool Commission and the Wool Board to discuss the wool situation and the activities of the commission. - At a brief pres* confer* ence after today’s meeting, Mt Holyoake said the wool industry representatives had given the Government their “latest thinking" on the situation but no decisions were taken at the meeting.

Mr Marshall said that reports that there, was a conflict of attitudes between the Government and the industry over the selling of wool were not correct Commenting pn the day's trading at Napier, Mr Holyoake said: “I think some’ people anticipated worse.” Mr Plummer said tn a statement: “This is a sacrifice of stability in wool marketing in the name of political expediency.” Mr Plummer said that when

the floor price was reduced in June it was recognised that the industry would face a trying time until the main bulk of the- fleece wool was offered in the new year. The main need had been for all in the industry and Government to hold steady but there had been far too many non-committal, evasive and weak answers given by spokesmen outside the farming industry to questions that bad demanded a straight-out blunt reply of strength.

“This sort of wavering hasn’t done us any good,” he said.

“The lack of confidence in the ability of the Wool Commission to hold its price has obviously been a factor in the buying trad* playing a waiting game, expecting that the commission would eventually weaken and drop its floor price.

“At the present floor price level wool can be bought very cheaply for manufacture by any country in the world. The critical factor, of course, is the lack of demand caused by a lack of orders for mills. “In dropping the floor price to such a low level there is the very real danger of transferring stocks from the commission to international speculators and thus destroying any prospect of rational stability in the marketing of wool.

“Now that this decision has been made it is essential that the Wool Commission Act be amended immediately to provide some meakurp of protection for those growers who Sell tfieir wool privately or through the New Zealand Cooperative wool Marketing Association,” Mr Plummer said.

Mr Spackman said the wool support scheme had been seriously weakened by the Government “There is no doubt that this decision will be received with delight by speculators,” he said. “Now that the Government has gone back on its recent promises it has delivered a death blow to any future operation of a floor price by the Wool Commission. “It ushers in a new concept of the Wool Commission as a wool marketing authority, paying a guaranteed price to the grower and selling the wool for what it can get.”