BAWRA WOOL

Evening Star, Issue 17920, 16 March 1922, Page 3

BAWRA WOOL

SELLING PROGRAMME POR 1922.

The annual report of tho British-Aus-trolian Wool Realisation Association, which haa been issued in London, throws interesting light upon some of the points that are presented by bir Arihiu* boldfinch in his letter. Now Zealand did not link up with 8.A.W.R.A., but the New Zealand Wool Committee, which is controlling the disposal 01 this country s wool during the period of difficulty, had been working in. co-operation with the organisation, and it'..baa maintained the BA W R.A. reserves. iho association has had tho handling of the 775,000 bales of New Zealand wool that formed part of the surplus in the hands of tho British Government at tho end of 19s0, an dm has been protecting the interests of the New Zealand fanners by putting this wool on the market in limited quantities. The report, therefore, is of direct importance to tho Now Zealand wool-growers. After referring to the arrangements made for limiting offerings and luting minimum reserves in the sale of the accumulated wool, the report states: the groat improvement in. the wool position and in tho tone and temper of the market which has recently occurred, and which may be confidently expected to continue and to gather strength, is rapidly taking away a groat part of the practical importance of the questions which have been the subject of heated controversy dining 1921. So far as they affect merino wool, many of these questions aro now a matter of history rather than of practical presentday interest, and it may bo predicted with some confidence that even as regards cross-bred wool the period of anxiety will come to an end during tho course of tho present year. DIFFICULTIES OVERCOME. “The favorable change in tho spirit of the market has, in fact, been so groat that there is a tendency to minimise yho gravity of tho outlook at tho time that B.A.W.R.A. commenced operations. Ihe enormous visible supplies of wool were not the most favorable factor at that time. The gravest feature was tho _prevailin'* pessimism in the market arising from °tho staggering losses which were being laced in unfulfilled contracts and Imavy stocks of manufactured goods brought over from tho boom period. Great financial stringency also existed, and demand for textiles in all the markets sank to a point so low as to be almost unprecedented in the trade, it was not strange that, under this accumulation of adverse circumstances, of wool wore inclined to their puichases to the very lowest point, and to await with apprehension a continuous fall of prices apparently with no visible limit. Tho directors of B.A.W.R.A. were convinced from tho first that tbo situation could and would rectify itself within a period of not more than two years, but there ■was reason to fear that a landslide in prices might in tho meantime take place, which would work havoc, not only with the interests of the wool-growers, but also with the entire wool textile “The directors were convinced that to allow wool prices to be forced for a period of a year or more far below the economic point by the pressure of the wool bought with national money would cause widespread injury to all 'the producing, manufacturing, and distributing interests, without in the long run doing any good to anyone. They -were able, therefore, cordially to accept tho principle laid down in the arrangement which preceded the formation of the B.A.W.R.A.—namely, that sales should not 'be forced so as to cause a fall of prices below the level at which continuity of production of now wool could be assured, and they endeavored throughout so to shape selling arrangements as to avoid such an injurious fall of prices below tho economic level.

OLD WOOL AND NEW. “ The representatives of Australasian and British interests who settled the framework of B.A.W.R.A. recognised from the first that a decision of much difficulty and delicacy would be required as to the division of the selling market between the holders of the old wool and the growers of the successive clips which would come into tho market while this great accumulation of old wool was being disposed of. . . . After discussion it was agreed that tho proportior of one bale of old wool to two bales of now wool should ho aimed at. It is a matter of notoriety that the Australian and New Zealand Governments have at times shown a disposition to claim a still greater preference for the sale of new wool over old wool. . . . The Government of New Zealand has at various times appealed for tho greatest possible amount of consideration of the interests of their wooLgrowers, who have suffered far more than the Australian sheep farmers by the collapse of the market, this consideration, of course, to take the shape of letting the sellers of the new wool have tho first call upon the available demand, holding back the old wool whenever necessary to provide a ready market for the new. “ The directors of B.A.W.R.A. have throughout felt the utmost sympathy with the difficult position in which the sellers of new wool were placed by the collapse of the market and tho very heavy visible supplies. While holding firmly in principle to their claim that a proportion _of one-third of the total sales of Australasian wool should bo secured for B.A.W.R.A. stocks, tbs directors have relaxed this claim in practice, especially during the period of 1921 when the power of absorption of the market sank so low. Further than this, tho directors have been unable to go, and it is satisfactory to note that Sir John Higgins and his colleagues (the Australian ■ directorate of 8.A.W.R.A.) have carried with them a large majority of tho Australian wool-growers m supporting the view that a systematic liquidation of the old wool, more or less in tho proportion of one bale out of three, is highly desirable, not only in the interests of tho owners of the old wool, but in the general interests of the market. It must, in any case, be made clear that the British Government rejected after full consideration the policy of indefinitely bolding back the old wool, and there is no prospect of that decision being altered. SUPPLY AND DEMAND.

“The contention that B.A.W.U.A. has attempted to sell too large a quantity of wool has not in general found much favor in England. . . . Any greater pressure to sell B.A.W.U.A. wool would have excited violent opposition and resentment in Australia and New Zealand, and the directors do not regrep the consideration which, within the permissible limits, they have steadily endeavored to show to the legitimate interests of the wool-growers in the British Empire. Although only Australian and Now Zealand wool is directly concerned, wool-growers in the United Kingdom and in South Africa were not slow to make it known that their very existence might be seriously threatened if the old stocks of wool were pressed upon a bad market in quantities beyond its power to absorb. The directors 'of B.A.W.U.A. arc profoundly convinced that the interests of the wool textile industry and of the community of wool users would, equally with the interests of the woolgrowers themselves, ho very much injured in the long run by a decline of prices seriously below the point at which the lessfavored growers can cover their expenses. “It is beyond dispute that the total wool production of the world in the years preceding the war was barely equal to the world’s requirements, and showed little or no tendency to increase, while the requirements were slowly hut steadily growing. It is also beyond dispute that the number of sheep in the world has substantially diminished since 1913, the decrease as ft whole being probably not less than 10 per cent. The accumulation of wool stocks was a direct result of the war.

. ... It is now becoming clearly evident that, although largo populations of wool users are unable for economic reasons fully to satisfy their requirements, never* theless the consumption of merino and cross-bred wool substantially exceeds the production. No further argument _is necessary to prove that any diminution of sheep farming as a consequence of unremunerative prices would m unmixed »

SHORTAGE OF FINE WOOLS,

The report places emphasis on the fact that the stocks of fine wool held by B.A.W.R.A. are coming to an end. The directors estimate that the whole of the old stock of merino wool will be sold, out before the end of the present year. There will be very little to offer after September. The merinos available for sale in London will be totally disposed of by the end of July. The tendency is in the direction of a further increase in the prices of fine wool, and the .directors suggest that this advance going to give the consumers an added interest in bringing about the changes of fashion required to stimulate the consumption of the coarse wools in which New Zealand is particularly interested. “ It may bo pointed out that the price levels fixed in the Now Zealand regulations as compulsory minima are so low as to bo almost beyond the reach of criticism,” states the report in commenting upon the local regulations of the Dominion and the Commonwealth. “ 'The raising of cross-bred sheep on a self-sup-porting basis must be dependent upon prices for the wool being obtained well above those fixed in the New Zealand schedule, which are about 40 per cent, below the ruling prices in 1913, at a time when productive costs were _vcry much lower than at present. No discussion of the New Zealand regulations can bo regarded ns intelligent which does not take into account the undoubted fact that tho state of prices at the time they were instituted, inflicted grievous losses on growers, and threatened to ruin them altogether if the fall went any further. So far as the ruling prices exceed that ruinous level, the Now Zealand regulations interfere in no way with the freo action of tho market.' STOCKS OF CROSS-BRED. “The quantity of cross-bred wool still held in stock by B.A.W.RA. on December 51 last was 1.386,946 bales, and there is no intention of attempting to sell out these stocks within any period arbitrarily fixed beforehand. It is to the growers of cross-bred wool that special consideration is duo, because only the most fortunate among them can be paying their expenses at tho present level of prices, seeing that tho mutton market is even more difficult than tho market for cross-bred wool. Tho directors for B.A.W.R.A. will feel reasonable satisfaction if during 1922 they are able to dispose of 500,000 bales of _ crossbred wool; but certain favorable indications aro now showing themselves which allow tho hope to be entertained that 600,000 bales may possibly bo disposed of without interfering with tho upward movement of prices, which the directors feel it is their positive duty within certain clearly-defined limits to encourage. THE PRICE LEVEL. “Tho position of wool supplies from the broad point of view of the world’s interests must bo regarded as unhealthy ns long as the growing of wool in Now Zealand and the Argentine is unprofitable, and a rise of at least 2d per lb in the price of coarse cross-breds will bo required before such wool can be grown on a remunerative basis. This association therefore, while unablo to recommend tho British Government to accede to tho repeated requests which have been made from New' Zealand to withhold stocks of old wool from sale till tho market is re-established on a healthy basis, is equally determined to avoid anything in tho nature of excessive offerings. “The association will contentedly carry over into 1923 the remainder of its stocks of cross-breds, feeling quite confident that next year, or early in 1924, tho surplus will be readily absorbed and the position of cross-bred wool will bo completely rectified, and will cease to require any artificial support whatever.”