Wool-selling system defended by broker

Press, 12 July 1988, Page 19

Wool-selling system defended by broker

PA Wellington A New Zealand woolbroking company was protecting Canterbury woolgrowers from serious price-cutting out of South America and at the same time supporting the shaky New Zealand auction system, said its chairman, Mr Gerry Williams.

The New Zealandowned and operated South American New Zealand Wool Marketing Ltd has established a system for linking the South American grown wool clip to New Zealand’s 56 international wool exporters. The wool remains in South America, but is sold world-wide on the basis of samples and test certificates presented in New Zealand.

“Fears that our operation is harming the equity of New Zealand growers — particularly Halfbred and Corriedale producers — is totally unfounded,” Mr Williams told members of the Corriedale Society in Christchurch. “In fact, the reverse is the case. New Zealand

wool of this type comes forward for sale in September or October, whereas the South Americans are still two months away from shearing at this stage. But a tiny minority of the international traders who operate out of South America buy the wool forward while it is still on the sheep’s back, and thus directly undercut New Zealand auction prices.” Mr Williams said prices paid to the South American growers were traditionally half-price compared with the New Zealand Wool Board’s minimum and it went to big users in China and Europe.

. “These users secure as much wool as they can, then turn to the New Zealand auctions to top up their requirements at discount prices. Under our system wool is sold after it has been shorn and tested and comes on to the international market some months after the similar New Zealand types have been sold.”

Mr Williams said wool industry sectors had applauded S.A.N.Z. activities, but for some unknown reason the Wool Board remained vehemently opposed in principle. The Wool Board had used the emotive levy issue in an attempt to frustrate the S.A.N.Z. operation and had refused an offer to assist in the establishment of an International Wool Secretariat levy-paying base in South America.

“By surreptitiously slipping through an amendment to the Wool Industry Act, we can only assume that their motives were commercial and if this is the case they have abused their considerable statutory powers in pursuit of monetary self-interests at the expense of private enterprise. The Government is watching this sort of activity very closely at the moment and opposes producer boards playing referee, line umpire and player all in the same game,” Mr Williams said. “We have asked the

Corriedale growers to give a mandate to the Wool Board to tidy up the levy issue and bring the South into line with other I.W.S. member countries by promoting the concept of international wool promotion through our contacts,” Mr Williams said.

“We have used the New Zealand auction system and have paid fees just the same as any other woolbroker in New Zealand, but since the change to the law we have had to take our selling operation offshore. The auction system is the basis of price support and orderly marketing, but right now it is under threat because of the upsurge in private buying and a general trend by growers away from this selling method.”

“The Wool Board should be looking at ways of improving the flow of wool through auctions and not try to clobber a small company which wants to support the system,” he said.