Co-ordination of wool prices

Press, 9 February 1984, Page 28

Co-ordination of wool prices

NZPA Canberra The Australian Wool Corporation saw a much greater need for future coordination in floor price policies between Australia, New Zealand and South Africa, said the deputy chairman, Mr John Silcock, in Canberra.

For finer apparel wool where Australia is the major supplier, the Australian dollar should be the reference currency with South Africa adjusting floor prices within a season, he told the 1984 National Agricultural Outlook Conference organised by the Bureau of Agricultural Economics.

This view reflected the effect of the 1983 appreciation of the Australian dollar against the so-called wool basket of importers’ currencies which resulted in both the South African floor price and the New Zealand intervention level falling well below the Australian floor price in recent months, he said.

Expanding on his remarks later, Mr Silcock said the South African Wool Board had been receptive to the Australian suggestion and further discussions were planned.

He said that as South Africa used a wool pool there would be no inequity between the prices that growers received within a season if the South African board adjusted its floor

prices in line with Australian levels as there would be if the Wool Corporation adjusted floor prices for currency movements within the season.

Another reason the South African board was receptive was that it had been on the receiving end when Australian floor prices were significantly below South African ones early last year, Mr Silcock said.

For New Zealand, the Wool Corporation believed co-ordination should take place on a govemment-to-government basis within the Closer Economic Relations agreement between Australia and New Zealand, Mr Silcock told the conference. However, there was a two-fold problem of both lower and movable auction reserve prices and of substantial recent Government subsidies to New Zealand woolgrowers through supplementary minimum payments, he said. These factors had insulated growers from the market and stimulated a 20 per cent output increase in New Zealand when neither shortterm nor longer-term market incentive was apparent, he said. But later Mr Silcock said the New Zealand situation was not so critical as its wool production had only a small overlap with types grown in Australia.