Role of Wool Corporation

Press, Volume CXIII, Issue 33276, 13 July 1973, Page 9

Role of Wool Corporation

I he policy decisions on the disposal n f wool on world markets and on the collection, preparation and presentation of the clip within the country stemmed from the over-all investigation that the corporation had been making, the managing director of the Wool Marketing Corporation (Mr W. J. Whineray) said this week.

The corporation having reached these conclusions, there seemed every reason that they should be given maximum publicity so that speculation and uncertainty inthe trade could be ended. He had been asked whether the policy statement made last week by the corporation’s chairman ,^ r w. M. D. Bremner) was in response to the renuest of the electoral committee for an investigation into an alternative method of selling wool to acquisition, and if that was the case, why the statement had been’ maiie now and not to the committee next month. Mr Whineray said that the corporation reached its decisions on commercial or business grounds, and matters of a political nature, such as the present electoral committee elections. were outside its terms of reference. On the question of alternatives to acquisition, be said that the corporation had looked at this but as the textile industry was organised today it could not see anything but a single comprehensive scheme as being viable. There was no alternative. But this did not rule out the possibility that at the time acquisition was due to be implemented there might be a change in structure. Thus it was the corporation’s present view that if there was to be acquisition it must be of all wool, including slipe wools and Drysdale wool. But ex-, emption provisions were still in the act under which the corporation operated, and if in time there were

good reasons for exemptions being made, the corporation would not be inflexible in this respect. Other questions were also put to Mr Whinerav. Q: The chairman of the Wool Board (Mr J. Clarke) has said that the introduction of acquisition is still subject to the approval of a clear majority of the electoral committee and the Dominion meat and wool section of Federated Farmers. But there is no reference in Mr Bremner’s statement that what he said was subject to this further approval. Mr Whineray: Mr Clarke was commenting on a matter in his sphere of influence, while Mr Bremner was speaking of business or commercial matters.

Q: On the vital wool marketing side, it seems that the corporation’s scheme represents virtually no change from the present situation, except that it will seek to ensure that buyers pay world prices for the commodity. There is no mention in Mr Bremner’s statement of investigating alternative methods of sale such as direct sales to manufacturers. It is, in fact, stated that as far as practicable, where the corporation is asked to supply wool by central buying agencies of overseas governments, it will involve existing distributors in any arrangements. Mr Whineray: As the circumstances are at this time and will be in the immediate future, the corporation sees its role as one of co-operating with and assisting the existing distribution trade. Mr Brem-

ner’s statement will be helpful to the marketing of wool up to and even shortly after the introduction o'f acquisition, if it is introduced. Q: It has been considered by many people that one of the greatest weaknesses, if not the greatest weakness, of the existing wool selling system, is the fluctuating prices to which the end user is subjected. It would now appear that the corporation accepts that there is not a great deal that can be done about this, for it says that it accepts in any commodity situation that prices are set by wot Id demand coming freely to bear on supply and are unlikely to be stable over a period. Mr Whineray: Fluctuations to the grower can be substantially reduced and, to a degree, also to the consumer by extending the selling season, spreading and regulating the supply of wool and also through the operation of a buffer stock. The corporation is realistic in assessing the limitations of what it can do. Q: it seems that the whole scheme is largely directed to streamlining the handling and presentation of wool in New Zealand and admirable as this no doubt is, the gains to be expected may well be only small. Acquisition of the clip is, therefore, apparently needed mainly for this purpose. Mr Whineray: The answer to this question would probably have to be yes, but it has to be seen not just as handling and presentation but as part of a whole package. There will be a flow over from streamlining which will affect price if we go into acquisition. There will be a buffering element. Q: It is said that growers will have a choice through whom they may sell their wool—through a broker, a co-operative or non-auction buyer. Is it not true that no matter to whom the grower sells his wool, he will receive the same initial price and the same final price, so that in effect this is of no particular significance to the grower, but provides a means of each of these channels having a place in the system. Mr Whineray: The corporation sees it being of significance that both now and in the future the grower will have the choice of using the facility best suited to himself, knowing at the same time, that, because in each instance the corporation will be the sole vendor of the wool, it will pass into commercial hands at the same price. Q: On the price to the grower—can it be interpreted from Mr Bremner’s statement that if a grower gets an advance payment at a predetermined price for his class and type of wool, and a final payment for this class and type representing the difference between the initial price and the average of the “on the day” prices for the same class of wool right through the season, he will, in effect, be receiving the full realisation for his woo) in a season so that the corporation will hold little or no reserve at the end of a season—there will be a full pay. In effect. then, there will not be a stable price to a grower. How do you see this system influencing the purchase of replacement breeding stock in the autumn? Mr Whineray: The corporation has to operate under the provisions of its Act. The key clauses in the act in relation to the end of season are that the corporation is permitted and required to preserve its capital. It can apply to its reserves any proportion of its end-of-season surplus, and whether this is a big or small proportion will be worked out at the end of each year in agreement with the Wool Board. How-

ever, what will be handed out to the grower will be in relation to the proportion of the surplus that the particular class of wool has generated. On the question of the influence of the system on the market for breeding stock in the autumn, growers will know at the beginning of the season the bulk of the money that they will be getting for their wool and that will be built into any stock values. After Christmas, with the information that is then available to them, it will be possible to make an intelligent estimate of what the position could be at the end of the season, so that it might be possible for growers to place a more specific figure on the value of the wool component in breeding stock than it has been possible for them to do up to this stage.