Private buying defended

Press, Volume CXI, Issue 32588, 23 April 1971, Page 13

Private buying defended

A spirited defence of private buying and selling of wool was given to last week’s wool marketing forum at Ashburton by Mr C. R. G. Woodham, who conducts one of the largest private wool-buying firms in the country and who is president of the Federation of New Zealand Woo) Merchants.

“As a federation we claim full credit for holding wool handling costs and any restrictions placed on private selling of the New Zealand clip would virtually place the wool market under a monopoly and increase the cost of the disposal of your clip,” he said. Refuting suggestions that private treaty buying had had a detrimental effect on the auction system, Mr Woodham said that nothing would be further from the truth. In support of this statement Mr Woodham said that between 1950-51 and last season wool sold at auction had increased from 882,986 bales to 1,436,647, or by 38.53 per cent over 20 years. At the same time private treaty buying had grown over the last 20 years from 3 per cent of the clip to 19.25 per cent Even if private selling did in any instance reduce the quantity of wool at any particular auction, it would tend to have a firminr tendency on the market. While private treaty buy mg had definitely increased quite rapidly over recent years, he said that with corresponding increases in production this had had only a slight effect on the auction system.

Mr Woodham described as “negative thinking” claims that it would not be possible to bring out a full roster of sales for the next season. For this seasons 70 sales he said that the average wool available per sale was about 25,235 bales, which was any amount for a single sale, and in total this represented 8.46 per cent more wool than in 1963-64, when with 1,295,295 bales sold at auction there was no mention of being unable to maintain a roster system.

Recently he said that a i sale had been cancelled , that had not been on last ■ season’s roster and on this I occasion the Wool Com- 1 mission had not offered i wool from its stockpile to ,

fill gaps as in previous years. Already one wool selling centre, which in the 1950 s had only three sales a season had completed its current season with five sales and had handled about 4500 bales more than last season. Mr Woodham said that the successful New Zealand wool merchant had his own standards that had to meet with the approval of the overseas manufacturer. In many cases their standards were higher than those set by the best wool brokers. Many types of wool produced were made specifically for the end user’s requirements. This necessitated the blending of various types to make a pro-._ duct that enabled the manufacturer to compete with his synthetic competitor.

One of the reasons for he big expansion in scouring of wool in New Zealand had been the ability of the merchant and exporter to ilend various types. Mr Woodham said that hey did not subscribe to he’ idea that the auction system was vital for the setting of the value of wool. In the winter wool was sold without price setting by the auction system but by world supply and demand, which would always be a guide to the end user. Many overseas operators, who had resisted private buying in the past, had endeavoured to buy privately this year, and they had been unsuccessful because they had been unable to pay the price asked by private buyers. Woolbrokers had done much to develop and assist the farming industry, but at the same time they had diversified into almost every facet of business. When one of their sources of income was threatened they tried to bring pressure on the Wool Board to have amendments made to the Wool Industry Act to give them protection

and a monopoly of wool selling. If this was the case, Mr Woodham said that any changes in the present system of wool marketing would be costly for the farmer.

Mr Woodham listed some of the reasons for the success of private buyers and sellers as follows: (I) the private buyer operates on a much lower handling cost; (2) most firms have working proprietors; (3) stricter supervision of a smaller working staff; (4) minimal administration costs; (5) cheaper operating costs from farm to store; (6) elimination of unnecessary classing when not required; (7) knowledge of end user’s requirements; (8) selective timing of selling to obtain best results; (9) in contrast to auction buyers the private treaty buyer must bid his highest possible price from the beginning of negotiations; (10) the private buyer shortens the chain between producer and end user; and (11) pro-