Not expecting too much

Press, Volume CXIV, Issue 33650, 27 September 1974, Page 9

Not expecting too much

While welcoming the improvement in prices for primary' produce exports that will follow this week's 9 per cent devaluation of the New Zealand dollar, the initial reaction of those close to the farming industry has been cautious. They are not expecting too much from it and the feel-

ing is that the ■ movement could have been greater. A nine per cent lift on the sort of wool prices that have lately been ruling, while useful, would not mean that prices had returned to a very satisfactory level. The average price for wool sold at the recent sale, which was in

Dunedin at the middle of the month, was 97,21 c per kilogram. Devaluation has not removed the basic weakness of the market caused by economic problems in the major consuming countries of the western world. Mr W. J. Whineray, managing director of the Wool Marketing Corporation, has said that he does not see devaluation giving a big boost to demand for wool, which really depended on the economic and financial situation in the consuming countries and more over-all confidence in the textile market. However, it might be that the more attractive basis now for buying New Zealand wools will persuade the Soviet Union, Eastern European countries and China to enter the market on a larger scale. It might mean, too, that the Wool Corporation will be called on to intervene less in the market. The economist of the Meat Board, Mr J. V. White, thinks that a bigger than 9 per cent devaluation would have been warranted to aid the ailing meat industry, currently beset by massive increases in costs for processing and also getting its products to overseas markets. Mr White has said that at current prices in London devaluation has added another $l.lO to the price of a lamb in New Zealand dollars and in the case of the average beef cow on American market rates another $l3 in New Zealand currency. But as a result of devaluation, too, the freight rate increase just announced of 17 to 18 per cent is likely to be effectively higher still, and just around the corner at the beginning of the new year the E.E.C. levy on lamb entering Britain will rise another 4 per cent. However, in the short term devaluation may mean that opening rates for lamb in the next export killing season will be high enough to avoid the Meat Board having to enter the markets