The Press SATURDAY, NOVEMBER 18, 1967. Wool Marketing

Press, Volume CVII, Issue 31530, 18 November 1967, Page 12

The Press SATURDAY, NOVEMBER 18, 1967. Wool Marketing

The long-awaited report of the Wool Marketing Study Group, released today, offers no solution to the major problem facing wool producers: the lowest prices for raw wool in 30 years. Only a major revival of demand can restore prices to payable levels. But this was not the problem the study group was asked to solve. When it was set up three years ago the group was instructed to report on the matters which then seemed most important to the industry: the causes of price fluctuations, methods of wool marketing, and related matters. By defining fluctuations as “ short-term . . “ deviations from a trend ”, the group virtually excluded from its terms of references any study of trends—“persistent changes occurring over a long “ period ”. And the trend (or “ fluctuation ”?) in the wool market has been downward for the last four years.

Within the limits set, the study group has made a significant contribution to understanding the problems of the industry. The main change suggested in existing marketing arrangements is the introduction of appraisal and acquisition of the wool clip. Each grower’s wool, the group recommends, would be appraised scientifically and bought by a new wool authority, which would sell the wool at auction, employing brokers as at present The advantage claimed for this scheme is that growers would know in advance what price they would receive for each grade of wool. At present they know only the Wool Commission’s average floor price and the current market prices for each type of wool. The scheme is to be self-financing over a period of years, as is the Dairy Board’s basic price scheme: if the authority’s purchasing price is higher than market realisations for several years the price must be reduced until the accumulated losses are paid off.

The cost to the grower of securing substantial price stability is formidable. If such a scheme, fixing prices to the grower at the average of market prices over the previous five years, had been instituted in New Zealand 10 years ago the accumulated deficit today would have been $lB3 million; the Wool Commission’s capital has never exceeded $75 million. Elsewhere, the report says that a surplus or deficit “ up to “ the level of, say, $lOOO million over the next few “ years could never be taken as evidence that the “scheme was no longer self-balancing New Zealand’s gross national product has never exceeded $4OOO million. These calculations suggest not that the Wool Commission was unlucky to come to grief this season but that it was lucky to have stayed in business so long. The study group’s proposals cannot be put into operation overnight. Prerequisites are the development of objective methods of appraising wool, an improvement in wool-classing, and the training of people skilled in these techniques. Rapid progress has already been made towards filling these requirements. This season the Wool Research Organisation at Lincoln is measuring samples of wool, mainly from the South Island, for five characteristics, including fibre diameter and length, yield, and scouring qualities. With the co-operation of the woolbrokers, who have already instituted a scheme for the descriptive labelling of bales, about 3 j per cent of this year’s clip will be sampled. Trade recognition of objective sampling is growing, and, if this season’s samples help buyers to place orders, the demand for samples next season might well tax the resources of the Wool Research Organisation. The next step would be to persuade growers that acquisition of their clips, at standard prices based on appraisal, was also in their interests.

This may well be the biggest hurdle the advocates of the scheme have to overcome. But the staggering blows the market has dealt the Wool Commission in the last 12 months have shown that a radically new approach to wool marketing must now be contemplated. This should include a close examination of all the outlets for New Zealand wool—not merely the original purchasers, but the intermediate processors, the manufacturers, and, finally, the endusers of the product Firms in the highly competitive woollen industry have a reputation for reticence, even secretiveness. Encouraging signs of a new willingness to make information available for the common good were found by the study group. Much more work has to be done before New Zealand wool producers can discover the exact requirements of the world-wide markets for their wool. But that knowledge is of little use until they know more precisely the characteristics of their product and can be assured that they will receive a fair price, preferably known in advance, for each grade of wool.