Pricing scheme for wool comes under fire

Press, 22 September 1980, Page 11

Pricing scheme for wool comes under fire

A Government-adminis-tered minimum wool price scheme isolated from market forces could lull farmers into complacency, the Meat and Wool section of North Canterbury Federated Fanners was warned yesterday.

Mr P. G. Morrison was explaining last month’s decision by the electoral committee of the Wool and Meat Boards which favours the Government’s supplementary minimum price scheme being phased out. The committee, of which Mr Morrison is a member, had decided it was better for producer boards to administer market-related schemes rather than continue with subsidies under the Government’s scheme.

Such support would not continue indefinitely and the Government had pointed out that pricing schemes had to be balanced out over the long term, Mr Morrison said.

“What we have to do is watch these schemes do not lull us into a sense of accepting anything so that in the long term we end up with an industry which is uneconomic,” Mr Morrison said. He noted that the electoral committee had not favoured an immediate end to the supplementary scheme.

Mr J. J. P. McLean, another member of the committee, said that while the scheme gave farmers confidence at a time when it was needed, the committee was concerned about the Wool Board’s insistence on setting a commerciallyviable floor price and to be able to market freely. In 1978, an election year, when the supplementary scheme gave farmers conelectoral committee had expressed concern bcause of its “political overtones,” he said.

Mr McLean questioned how the scheme could be market related when prices were set so far in advance.

The issue had been raised at yesterday’s meeting by the Amuri branch of Federated Farmers which questioned the committee’s decision and sought a statement of Federated Farmers' policy on minimum pricing arrangements. A letter from the Minister of Agriculture (Mr MacIntyre) this month said that the Government would discuss with the Wool Board the possible incorporation of the supplementary scheme with the board’s scheme.

Pricing schemes had to be not just market related but “meaningful to producers” and provide a basis for planning for future investment, Mr Maclntyre told Federated Farmers. The Government’s scheme had been introduced to correct deficiencies. In a letter to Mr MacIntyre last month, Fderated Farmers said its Dominion meat and wool conference had decided that Government and board schemes should be kept separate and the present supplementary scheme be retained “until satisfactory alternative economic measures are taken by the Government providing a climate where farming can flourish and provide benefits to the whple nation.” The chairman of the Meat Board (Mr C. Hilgendorf) told the meeting it was not clear whether the supplementary minimum price scheme was intended as income support or a price smoothing scheme. It was unlikely that the Government would be willing, politically, to support farm incomes in the long term in isolation of market forces, he said.

He had always argued in favour of a “wide band” type of price support scheme, where the producer board intervened only when prices were particularly high or particularly low, Mr Hil-