WHAT IS WOOL WORTH?

Hawke's Bay Tribune, Volume XIV, Issue 24, 11 January 1924, Page 4

WHAT IS WOOL WORTH?

Under this heading a Sydney exchange just received discusses in its pastoral column the question thus asked, and as its comments are readily adaptable to our own conditions, under which coarse wool is rapidly rising in market value, it may be Worth while market value, we .may quote them. The statement. it says, has frequently been made abroad latterly that fine wool was realising more than its intrinsic worth. It is rather a bold assertion to make, because the value of any commodity is based on the demand available for it. compared with the supplies which exist, df silk could Jje produced as freely as cotton, fabrics made solely from it would not be as dear as they are to-day. The statement that wool is too dear is prompted by comparing current figures for it with prices in pre-war days. It also arises from the fact that English top makers’ profits have not of late been as large as they were. Of all branches of the woollen mill industry they have suffered most. Strong competition for reduced quantities ot wool has compelled them to pay advanced figures for raw material, and textile makers have not been willing to advance figures for the tops they require to the same relative extent. Wool, however, which looked dear to American, and English manufacturers three months ago apparently appeared cheap to the French trade. France bought it heavily at that time. As a result. she has the cheapest wool of the season, and buyers from the other two quarters mentioned have latterly been purchasing a dearer commodity.

When wool is stated to be dear, our contemporary proceeds, the fact is ignored that every article produced is over-costly, compared with the days before the war. It would be difficult to find one commodity which is not costing 50 to 100 per cent, more than it did in 1914. The mill-owners who complain regarding the high price of wool forget that if wool rates were on the level of nine years ago it would prove the worst possible experience for the manufacturing industry. Woolgrowing would cease to be a profitable activity. Supplies of wool would so diminish that want of raw material would drive many mills out of business. Freights, station wages, and all the hundred and one expenses which are a charge on the. wool clip have risen. The land on which the stock graze is dearer. In Australia a, capital expenditure of £4 to £5 is required to provide sufficient land for one sheep. Taking the lowest figure, 4/9 per head must be earned to provide 6 per cent, interest for expenditure on land. How many commercial establishments are satisfied with a 6 per cent, return ? Shearing and landing the wool in Sydney cost 1/- per head. In those two items. 5/9 disappears, and a whole year’s working expenses must be borne in addition. High though wool prices have been in Australia, it can be safely stated that the world’s woollen manufacturers over the last three years have earned better average profits on the capital invested than most sheepmen. Just as high wool prices would be economically impossible if wages throughout the world were on low levels, so it would not for long prove possible to grow wool if prices for it were*low and wages and other expenses were high. If woolgrowing was an extraordinarily profitable occupation it is doubtful if there would be such a decline in the world’s wool clip. Capital and enterprise are not usually lacking if profits are available. Wool is high in price. Good figures, however, are necessary for its profitable production. If buoyant values continue for a number of years, supplies of it may increase and for a tim© exceed consumption. In that case rates will drop; but their fall will be quickly followed by a decline in the quantity grown.