THE PRESS SATURDAY, MARCH 30, 1985. More for the I.W.S.

Press, 30 March 1985, Page 18

THE PRESS SATURDAY, MARCH 30, 1985. More for the I.W.S.

Wool-growers in New Zealand will be as pleased as the International Wool Secretariat with the announcement that New Zealand’s contribution to the finances of the secretariat will be increased. The New Zealand contribution comes solely from the funds of the New Zealand Wool Board which come, in turn, from a levy on growers. The greater contribution to the work of the I.W.S. that is planned for 1986-87 will place no additional claim on New Zealand wool-growers, however. .In the main, it reflects the better health of the wool industry by comparison with its condition a couple of years ago. In March, 1983, the Wool Board found it necessary to trim its budget. One effect of this was a cut of $l3 million in the contribution to the I.W.S. for the present financial year, the first year that the budget cuts took effect. The response from the I.W.S. was to split its promotional and research budgets so that woollen clothing and other wool products such as carpets and textiles were treated separately. New Zealand wools are used predominantly for carpets and textiles. The direct consequence of New Zealand’s reduced contribution this year has been that virtually no consumer advertising for woollen carpets now appears in New Zealand’s major West European markets. Perhaps more important, the funds that the Wool Board has committed to the I.W.S. next year, and intended to contribute in 1986-87, were still insufficient to allow the restoration of carpet advertising in Europe or to enable the other marketing programmes that should foster the principal end-uses of New Zealand wools, such as bedding and upholstery. Obviously such a state of affairs could not continue for long without serious consequences for the New Zealand wool industry. The greater contribution that the Wool Board now believes will be possible in 1986-87 will help to restore at least part of these marketing programmes, but will still be less than the funding level of 1982-83 in real terms. The Wool Board intends to increase the contribution to the I.W.S. by rearranging the way in which it spends its 6 per cent levy on the prices received by wool-growers. The income from this levy has increased as a result of the combined effects of a buoyant market, last year’s currency devaluation, a record level of wool production, and the sale of a lot of wool that the board held in stock. Many of the gains will not necessarily be repeated, but they have improved the board’s finances to the extent that it can contemplate a reduction in the amount of the levy that is dedicated to maintaining a fund for protecting minimum prices for growers. At present, 1 per cent of the levy goes into

the minimum price funding account, to be available for the board for market intervention and price support. By reducing this to half of 1 per cent, about $7 million a year would be freed for research and marketing. The first demand on these funds would be to restore lost opportunities such as carpet advertising in Europe; and many new opportunities await exploitation. The growing Chinese market, the boom in consumption of carpet wools in the United States — which uses one half of all carpets made in the world each year — and the dramatic rise in raw wool imports by the Japanese market this season are but a few of these opportunities.

The proposed increase in the contribution to the I.W.S. should also please New Zealand’s partners in the secretariat, particularly Australia. Australia and South Africa have helped to maintain the I.W.S. budget in real terms by making up the shortfall in New Zealand’s contribution. Australia, which is the biggest single contributor to the 1.W.5., has shouldered the biggest share of the extra burden, but not without complaint. In their criticism, however, the Australians tended to play down the fact that New Zealand is the second-largest contributor to the I.W.S. — ahead of South Africa, Uruguay, and Brazil — even allowing for the present reduction. More significantly, the individual contribution from New Zealand growers has been consistently higher than that from Australian growers. This is true whether the comparison is made on the basis of a proportion of clip values or on the contribution from each individual grower. This is because the Australian Government supplements the amount that Australian wool-growers contribute to the I.W.S. to the tune of more than $2O million a year. The Australian complaints did not acknowledge that last year, for instance, the New Zealand Wool Board’s total income from the levy was $lO million less than it contributed to the I.W.S.

New Zealand’s ability to contribute to the I.W.S. has been reduced severely by consecutive years of falling real prices for wool, by the continuing decline of the New Zealand dollar, and international inflation. Given the decline in fortunes of the New Zealand wool-grower, and the Wool Board’s readiness to go into the red to support the 1.W.5., it can hardly be said that New Zealand has been shirking its responsibilities to the secretariat. The willingness of the Wool Board to pass on so readily to the I.W.S. the first benefits of a strengthening market and improved finances should reassure New Zealand’s I.W.S. partners of this country’s commitment to the international promotion of wool.