Changes on wool reduced

Press, 4 January 1980, Page 6

Changes on wool reduced

Central wool facility charges for the dumping and container packing of wool have been reduced by 7.5 per cent for the current season, representing a saving of $500,000 on costs incurred during 1978-79. For the previous season, charges were reduced 3.5 per cent, giving a total reduction for the two years of 11 per cent. “Without a doubt, the wool dumping industry must be one of the very few areas in this inflationary period where costs between farm gate and the overseas customer have been reduced,” said Mr M. j. Harkness, of Wellington, chairman of the Central Wool Facilities Committee, the industry organisation for the national network of central W'"ul facilities from Invercargill to Auckland. Mr Harkness said that the cost cutting achievement was even- more meritorious in the light of the Meat and Wool Boards’ Economic Service statement that other costs between farm gate and mill increased by 15 per cent in the last year. He attributed the economies achieved by the. central wool facilities to: (1)

minimising duplication of labour and capital in competing facilities; (2) greater throughput of bales .in the ■ central facilities, enabling labour, machinery and buildings to be used to full capacity, thus deducing idle time and gaining economies of ' scale with fixed costs spread over the maximum number of bales; and (3) the improved wool flow resulting from centralised control and the use of onlv one location in each centre. “In the light of the proven benefits of this situation, it is strange to hear calls for diversion of the New Zealand flow through alternative routes,” said Mr Harkness. “While such action could be to the financial advantage of interests espousing the argument, the simple fact is that diversion of wool away from the central facilities must increase costs to all other users. “In other words, the increased profits of companies calling for diversion would be paid for by the rest of the wool trade, which in the last analysis means the New Zealand woolgrower.” Mr Harkness said the price reductions in two successive years proved that wool dumping and container packing were a service function where rationalisation was more economic than a proliferation of facilities of varying efficiency operating without central planning. Further efficiencies were imminent. The central wool facility committee had just signed’ a SI.SM contract for seven new dumping presses capable of loading 90 bales into a standard ISO container, as against the present 56-bale maximum. Orders for six more of this type of press were to be placed in the near future. The higher densities thus achieved would not only result in shippers obtaining the benefits of the already negotiated concession on European shipments, but further freightconcessions should be possible. Central wool facilities were set up beginning in 1977 at the instigation of the Wool Board and with the agreement of the container shipping companies to ensure an efficient and economic wool dumping and container packing service in the then new cohtainer age. Wool brokerage, wool dumping and other companies in the industry formed separate joint ventures to set up single central wool facilities in each production ’

area. The aim was to contain or to reduce costs ultimately borne by the woolgrower.