Merchant Criticises Wool Commission

Press, Volume CVIII, Issue 31659, 20 April 1968, Page 17

Merchant Criticises Wool Commission

Mr E. R. Klijn, managing director of Hart Wool (N.Z.), Ltd, has some sharp criticism of the Wool Commission and Wool Board in their handling of the floor price scheme and the disposal of stock wools in a statement which he sent to “The Press.” He says: “During the last 16 months the Wool Commission has bought more than 700,000 bales in an unrealistic effort to force overseas users to pay an uneconomically high price for New Zealand wool in the face of heavy competition from synthetics. In the process, the Wool Commission used up its capital of £36 million and is now heavily in debt to the Government, which in Its turn has mortgaged this stock overseas. “During this period, many reassuring statements were made by the managements of the Wool Board, Wool Commission and others. “It is interesting to look back on these statements: the W’ool Commission is a ‘strong holder’ of stock and will never resell this stock below cost price; the Wool Commission will maintain the floor-price level and will have unlimited Reserve Bank funds available to do so: the Wooi Board considers the auction system the most suitable way to market the woolclip, etc. “By backing the Wool Board the Wool Commission financially, the New Zealand Government became the biggest commodity speculator in the world and with borrowed money at that! “There is no doubt that this poor speculation greatly influenced the decision to devalue the New Zealand dollar by 20 per cent “Meanwhile, due to the heavy stockpiling by New Zealand authorities at very high prices, competitors in South America and Australia have been able to sell their production at reasonably satisfactory prices, and in spite of a devaluation of 20 per cent which should have created higher export prices for New Zealand wool, the low prices now being paid are due to the irresponsible inter-

ference with the price mechanism by the Wool Board and Wool Commission. Mr Klijn said members of the Wool Board and Wool Commission had shown poor judgment and many of their reassuring statements in the last 16 months had not been borne out by events. “The Wool Board and Wool Commission professed that they were the only organisations capable of creating an ‘orderly’ marketing system without fluctuations in prices for the farmer and the overseas user,” said MrKlijn. “Lack Of Policy” “Whilst Mr Greensmith states that 100,000 bales of stock will be resold at a loss, Mr Acland states that they may not do so if the market drops too low. Meanwhile, Mr Spackman declares that prices will not be allowed to go too high, and on the same day. Wool Commission salesmen tell the Carpet Wool Council in America that they will not sell wool privately at a loss to individual users, but only to overseas Government organisations where it would mean consumption over and above *normar levels of consumption. How would the Wool Board know that the ‘normal’ level of consumption had been reached for individual types of woo’ In any country, and why discriminate on price against private overseas users who have been good customers for New Zealand for decades? If the stockpile is going to be sold cheaply, it is only fair that everyone receives a chance to participate. “All these contradictory statements do not create much confidence in ‘orderly’ marketing schemes, and indicate a complete lack of policy inside the Wool Board and Woo) Commission, and ignorance about international trade and commodity trading in particular These Utopian schemers are rapidly becoming the laughing stock of the world textile industry “Meanwhile, manufacturers who have bought stocks of wool this season, trusting that the board’s reassuring statements would be honoured, are licking their wounds and counting their losses. “Confidence, contrary to the stealth with which it crept back into the market, has swiftly disappeared.”