“Critical Year” For Sheepfarmers

Press, Volume CVIII, Issue 31763, 21 August 1968, Page 26

“Critical Year” For Sheepfarmers

(N.Z. Press Association) WELLINGTON, August 20.

The coining year could be critical for sheepfarmers although a number of events in recent weeks had encouraged a more hopeful view for New Zealand, Sir John Acland, chairman of the Wool Board, said to the board’s electoral committee today.

Wool prices had been low for two years, he said. The Wool Commission had cushioned the impact and many men had gone into the recession well prepared and with their farms in good order.

“But about now the Industry will really begin to feel the effect,” said Sir John Acland. “Wool prices are 23c per lb and although some rise may be expected, we are not going to see the 35c to which we have been accustomed. «

“We are face to face with the reality that crossbred prices have dropped about one-third. We cannot shrug this off. “Lower incomes mean that development work has to be postponed and this hits the aerial topdressing industry and many other contractors, if these men are out of business this is another loss to farming. “Lower incomes also mean the farmer is more vulnerable to misfortune,” he said. “If present prices continue for long many men will not be able to continue in business. For them, everything they have worked for hangs on our ability to secure a better net return for wool through higher prices and lower costs.” Sir John Acland said there had been talk about growing finer wool and there was a case for doing so where it was practicable. But it was not possible greatly to change the character of the clip in the few years which were going to be decisive. The low wool prices would encourage farmers to coilcentrate on

meat production and this would keep the clip in the strong wool field. “Largely, we are going to have to take the wool as we find it, devote our efforts to presenting it well, and reduce the costs of marketing,” said Sir John Acland. “In addition we have to encourage manufacturers everywhere to put those wools into attractive and profitable use.” Sir John Acland, said production would continue to increase and by 1972 it could reach 800 million lbs. He said the board would meet the Government in a few days to discuss finance for Its work and for the work o f the International Wool Secretariat. The board had lost the income from the interest earnings of the Wool Commission and during the coming season the deficiency would be made up by the Reserve Bank loan at an interest rate of 1 per cent. New Zealand’s problems had been intensified by the British decision to devalue. The I.W.S. had insured against this for the 1967-68 season, but it now cost about

$14.3m to carry out the work which formerly cost sl3m. A budget of $15.6m was desirable in 1968-69 to take account of devaluation, rising costs, and some increase in activity. Australia and South Africa had agreed to supply their share but for New Zealand, already working on borrowed capital, this was impossible. Sir John Acland said some increase in expenditure could be expected in future. In New Zealand there were plans for extending the work of the Wool Research Organisation on crossbred processing and crossbred products, and overseas I.W.S. expenditure would rise. Sir John Acland said there were three solutions to the problem. First, the grower could contribute more. The levy, as a percentage of auction receipts for wool, was 2.8 per-cent last season and no other primary exporter was paying anything like this for promotion and research.

Second, the board could agree to further depletion of the Wool Commision's capital. It was strongly opposed to

this because the funds were created to protect the grower against the stresses Imposed by the market. Finally, there could be a direct Government contribution -to promotion and research.

Woolgrowers had a good case. In the last five years they had paid $19.7m in levy and a further slom had come from the interest earned by the industry’s funds. "The industry had committed all its funds and gone into debt in an exercise which has helped to sustain the economy through a difficult period. “In the circumstances many people—farmers and city dwellers—think a contribution from the Government would be reasonable. It would also be prudent. Our effort through the I.W.S. still represents New Zealand’s best chance of regaining prosperity,” said Sir John Acland.